The financial website "Business Insider" analyzed the spending habits of the top 20% of households in the income rankings across the United States, which have an average pre-tax annual income of $177,851.
At the same time, researchers also investigated the spending habits of the bottom 20% of households in the income rankings, which have an average pre-tax annual income of $10,916.
Among low-income households, housing expenses account for an average of 40.4% of their income, making it the largest proportion of all living expenses. The second largest burden is food expenses, which account for about 15.4%, followed by transportation costs at 14.5%. In numerical terms, the combined expenses for "food" and "transportation" in low-income households still fall significantly short of the single expense for "housing".
Statistics show that low-income households predominantly rent their homes, with about 62% living in rental properties, while only 38% own their homes.
In contrast, the percentage of homeowners among high-income households is as high as 87%, with only 13% renting. The housing expenses reported by the Bureau of Labor Statistics include rent, mortgage payments, property taxes, cleaning fees, management fees, furniture costs, phone bills, and internet fees, but the largest expenses typically come from rent, mortgage payments, and property taxes.
Housing expenses for high-income American households also represent the highest proportion of all living expenses, at 29.9%, followed by transportation expenses at 16.1%, and personal insurance and retirement savings closely behind at 16%. Food expenses rank fourth, at about 11.2%.
High-Income Households Have Higher Insurance Expenses
This survey report indicates that high-income households have higher insurance expenses, one influencing factor being that these households typically have more members, with an average of 3.1 people per high-income household compared to only 1.7 people per low-income household. Additionally, the proportion of high-income households with children is also higher than that of low-income households, many of whom are single individuals who do not have to worry about purchasing insurance for children.
Low Income Does Not Equate to Poor Households
Researchers point out that the "low-income households" in this survey do not necessarily represent "poor households". Among the households at the bottom of the income rankings, as much as 25% are retirees aged 65 and older, who have left the workforce and are no longer contributing to Social Security but are receiving Social Security benefits. Although classified as low-income, some individuals are actually quite financially comfortable.
Moreover, among the lowest 20% of household incomes, 27% not only own their homes but have also fully paid off their mortgages. In contrast, among the top 20% of income earners, only about 6.5% are retirees aged 65 and older.
Veri Crain, an economist at the Bureau of Labor Statistics, analyzed that in the lowest 20% of income households, as much as 46% are retirees and college students, both of whom are not suitable to be labeled as "poor". She pointed out that some retired individuals are actually quite wealthy, and college students, as new entrants to the workforce, may have low salaries but have many opportunities for advancement in their future careers, thus should not be classified as "poor".
High Income Does Not Equate to Wealthy Households
Similarly, Crain pointed out that among the top 20% of income households, if one further examines the various actual conditions of these households, it becomes clear that "high-income households" do not equate to "wealthy households".
She stated that if a household has a high income ranking because many members are earning money, yet has many children to support, lacks assets, and resides in an area with a high cost of living, then these individuals may not experience a sense of "wealth" in their daily lives.
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