Your Cash Flow Normal?
Have you ever sat at your desk, paying
bills, and wondered if everyone else spends as much as you do? The
government might have the answer.
Every year, the Department of Labor issues a report
on consumer expenditures. It's an interesting glimpse into the bank
account of the average American. The most recent report (based on
2001 data) contains the following nuggets:
· The typical "consumer unit" --
essentially a household, whether it's a four-person family or an
independent bachelor -- spent a total of $39,518, up 3.9% from 2000.
· Housing was the biggest expense, costing
$13,011. That included spending on utilities, fuel, and public services
(up 11.2%) and outlays for home furnishings (down 5.9%).
· The average consumer unit spent $5,321 on
food -- $3,086 at home and $2,235 eating out. However, that gap
is closing: Spending at restaurants increased 4.6% while the grocery
bill rose just 2.2%.
· Transportation cost $7,633, almost half of which went to
· Annual spending on tobacco products and supplies ($308)
was more than twice as much as expenditures on reading materials
($141). We'd like to think that this was because so many people
used the library, but we doubt it.
How does all this outflow compare to inflow? According
to the report, the before-tax income of the average consumer unit
was $47,507. However, the Internal Revenue Service says that the
average tax bill in 2001 was $9,401. So that leaves $38,106 to spend
-- which is a bit of a problem when you recall that your friendly
neighborhood consumer unit spent $1,412 more than that.
Furthermore, if the consumer units are segmented according
to income into five groups of equal size, the expenditures of the
bottom two quintiles exceeded before-tax income by $10,937 and $6,173,
respectively. The inflow and outflow of those in the middle quintile
were approximately equal -- but that's before taxes. In other words,
only 40% of Americans live below their before-tax means.
You might ask how the Department of Labor got all
this information. No, Big Brother didn't implant a computer chip
in your buttocks to monitor when your wallet is removed. The data
was gathered by two methods: interviews and a spending diary.
Article continued at http://www.fool.com/News/mft/2003/mft03091510.htm?source=mppromo