I thought it would be interesting to compare my expenses against the “Average Joe”, to see how different my lifestyle really is from the norm.
It turns out that the Bureau of Labor Statistics collects data on this sort of thing every year as part of the Consumer Expenditure Survey. And, lucky for me, the most recent data sets for 2014-2015 were released only 2 weeks ago. So, I dug in.
Since I am single, male, and between 25 and 34 years of age, that is the cohort that I will be comparing myself against. That data can be found in this table.
At first, I wanted to compare my expenses with the average cohort of my age category by category, but some of my spending categories do not match up very well with the BLS’s, so it was hard to make direct comparisons. BLS was oddly specific in some cases (floor coverings? really?) and notably lacking in others (I guess nobody does any travelling?). For the more ordinary expenses, I was able to make some direct comparisons with the last 12 months of my own spending:
I was not too surprised to see that I am spending less than average on housing compared to other single guys my age. I live in a very inexpensive part of the country so my housing is very cheap, and I get a lot for it. My apartment is much larger than I actually need and I would be renting a smaller place if I had more options.
I was surprised to see how much more people spend on electricity, almost 3 times as much as me! Where is all of that going?? TV? A/C? Probably A/C, going by my upstairs neighbors. On the other hand, my water bill is almost twice as high as average! I only use about $5 / month of actual water, but my town levies so many taxes and fees for delivery, sewer services, etc. that I end up paying about $40 / month regardless of how much water I use. I guess that’s one of the drawbacks of living where I do.
Not surprisingly, the average guy’s food budget is over twice as high as mine. I have a personal rule that I never eat at a restaurant alone. If I am going to be paying for restaurant food, I had better be there as a social event and not just because I was too lazy to prepare food for myself at home. As a result, I cook/prepare nearly all of my meals, and that’s how I come out so far ahead on food spending compared to average!
I also drive a lot less than the average guy my age, so that makes my gasoline spending 3 times less than average. I’m not too surprised to see this, as I made a deliberate effort to live as close to work as possible in order to shorten my daily commute. I also don’t drive much outside of work; basically, I go grocery shopping once a week and take occasional trips into the city or to the airport. The high car expenses on my part is due to purchasing a full set of winter tires 10 months ago. Besides that, I have only spent money on two oil changes, wiper blades, air filters, and a car wash.
Finally, after looking at the total spending numbers, I come out way ahead! According to the BLS survey data, single males between 25 and 34 manage to spend $36,803 per year on average! By comparison, I spent only $21,538 in total over the past year. And my spending included two week-long international trips (UK and Japan) and a cross-country flight to visit family over the holidays! Where is everybody else’s money going?!
…well, I guess the answer to that question is in the data. I see that the BLS survey included pension/retirement contributions under spending (I count that as savings for myself), which accounts for a little over $4,000 within my age group. And it also counts net outlay on vehicle purchases (which may or may not account for depreciation, I’m not sure), which totals about $3,000 per year on average. Still, that only accounts for about $7,000 of the difference, with about $8,000 per year apparently wasted?
Even more worrying, the pre-tax wage income for this group is only $40,463, which becomes $37,018 after taxes. Assuming that 6.2% of the pre-tax wages go to social security (totaling just over $2,500), that means that the average single guy around my age is only saving about $1,500 per year for retirement beyond his forced social security payments! This comes out to just 4% of his after-tax income! At that savings rate, he has absolutely no chance at retiring early, and may struggle to get by even with social security if he does not make serious changes to correct his course! I recognize that I am fortunate to have a high-paying job which allows me to save a large portion of my income, but at the same time I am spending around $10,000 LESS than the average single guy of similar age. If Average Joe mirrored my spending habits and saved that extra $10k instead of spending it, his savings rate would rise to about 30% of his after-tax income (even higher if he puts that money in tax-advantaged accounts like a 401(k) and/or IRA! With a 30% savings rate, you can retire after about 28 years of working, assuming that you start with nothing. It doesn’t sound very impressive, but it would give even the Average Joe a good chance of a decent retirement around age 60 (slightly earlier than average!) without depending on social security for handouts.
With 80% of my cohort having attended college (according to the survey, anyway), it’s a shame that so many of them are making such poor financial choices! I hope that things improve for them in the future!