4 ms·

How Americans Spend their Money (pictocharts)

24 points by alaskamiller 19y ago

deleted 19y ago
[deleted]
pg 19y ago
That is frightening: only the richest fifth save money. Or to put it another way, instead of saving, the poorer four-fifths live as much like the richest fifth as they can. I bet this was not always so in America, and I bet it is not so now in China.
- ivankirigin 19y ago
  In a consumer culture, where entertainment, experience, and stuff is what life is about, why would anyone save? What are you saving for? I would imagine with multiple huge revolutions in recent memory, people in China might have a reason for a different outlook. It is actually totally backwards, because a poorer nation can expect to grow at a much faster rate than a developed nation -- you just need to take off the brakes in the system for it to happen. If you ignore the shaky history, you'd have to be pretty dumb to save money when the economy is growing at 10% annually for a decade (unless that savings is in the form of investments, but it usually isn't)
  - ken 19y ago
    If you turn off the TV for a few minutes, you'll realize that "entertainment" and "stuff" is not "what life is about", and experiences can be had on the cheap.
    - ivankirigin 19y ago
      I'm talking about trends in society, not my particular views. I don't think anyone can say "what life is about" (including you), but I think my comment was fair. Look at what people spend their time and money on, and you'll see what they care about. The richer people get, the more things become about experience, as opposed to consumer good consumption. "experiences can be had on the cheap." You're right. Back to the original point: why would people save if their priorities are about consumer good consumption, and then good experiences once they have all the stuff they want? More generally, I think the bias towards saving is a too abstract view about macroeconomic conditions. Credit is actually really, really cheap these days. Things are really cheap, and experiences can be too.
  - deleted 19y ago
    [deleted]
  - asdflkj 19y ago
    What do you mean by "take off the brakes"?
    - ivankirigin 19y ago
      Trade restrictions, high taxes, institutional corruption, ambiguous private property rights, lack of viability in contracts... You'd be amazed at how badly it seems some 3rd world countries want to fail.
      - pchristensen 19y ago
        But boy, take off those brakes and those countries can go fast! They get to use 150 years of Western industrial experiences and lessons learned without having to figure it out by trial and error.
      - asdflkj 19y ago
        How about a culture of violence and thievery? That takes decades of sustained effort to change, if not centuries. The things you've listed are merely symptoms. Saying that some 3rd world countries want to fail is like saying that endangered species want to go extinct.
- jpancake 19y ago
  You may also try reading it like this: only the fifth richest have money to save. Due to the inflexibility in cost of necessary commodities (food, housing) one may mistakenly read that as 'the poor trying to live like the rich,' but that is far from the case. Let's assume that you spend $200 a month (a fairly meagre amount) on food; that would be $2400 a year. And you also spend $600/month on rent (a fairly low/middling amount). That's $7200 a year. Combine the two and you get $9600. That's already >90% of the TOTAL income of the lowest bracket. The lack of savings among the poorer members of our society has less to do with trying to 'live like the rich' than with 'not being able to do so.'
  - pg 19y ago
    Due to the inflexibility in cost of necessary commodities Really? So are all the people driving around in lowered SUVs with giant chromed rims rich? Or are you saying that lowered SUVs with giant chromed rims are a necessary commodity?
    - jpancake 19y ago
      I think it's cute that you skirted my main point. A car isn't a necessary commodity. Food is. Housing is. Cars aren't. For the poorest Americans, the necessary acts of eating and securing shelter consume the vast majority of their income. Secondly, what makes you think that someone who's driving a 'lowered SUV with giant chromed rims' can't afford it? Implicit racial bias? Why did you pick this example? Why not something closer to home: Did every douche in Silicon Valley with a BMW pay for it outright?
- far33d 19y ago
  This is ultimately why consumption taxes are a dangerous thing, despite how logical they seem. They are designed to create incentives for saving, but will merely punish those who have no ability to save in the first place. At the same time, it might discourage some of what you are describing (living larger than your means). I think that might be the case for some portion of the bottom fifth and a large portion of the second fifth (McMansions, leased cars, etc etc).
  - byrneseyeview 19y ago
    Somehow, Americans had the ability to save fifty years ago, when they were much, much poorer. Did the cost of living go up radically since then? Or are they pretty sure that people who think like you will make sure they don't pay for their profligate nature?
    - pchristensen 19y ago
      According to the graphic with the story (http://www.nytimes.com/imagepages/2008/02/10/opinion/10op.graphic.ready.html http://www.nytimes.com/imagepages/2008/02/10/opinion/10op.gr...) the 50th percentile American had a fridge, a stove, electricity, and a radio. There's a lot more stuff to buy, and people value the convenience and utility of other stuff (Cell phone, washer, computer, internet) a lot.
      - byrneseyeview 19y ago
        In that case, I don't see why this is so bad. They value efficiency, so they borrow money and pay back the debt by working harder and more efficiently. I can see how investing in a refrigerator, stove, computer, and internet access would be worth it even if you put them all on a credit card at 20%; I wouldn't have a job without a computer and internet access, and I wouldn't have time to work without refrigerated food. Since this chart is careful not to adjust for age, we don't know if this is a story about 20somethings borrowing to start a family, 50somethings earning a lot of money at their peak careers, and 70somethings living off of the interest in their retirement accounts. In other words, this kind of chart could portray a totally egalitarian society in which everyone earns the same amount over a lifetime, but they earn it at different times. Thanks for adjusting the chart so there's no way to know that, NYT! I'm glad your writers don't have an agenda I should worry about!
mynameishere 19y ago
I won't speculate on the nytime's possible editorial status on the question of class politics, but the bulk of the disparity has to do with the fact that young people tend to go into debt, adults tend to earn and save, and old people tend to divest.
- pchristensen 19y ago
  Agreed. A couple years ago I was a married student with a kid and a $17K stipend, taking out $XX,000 in loans. Now I'm not borrowing any more money (well, except the house), paying back tons every month, and earning many times what I was then. In two years, I moved from the 20-40% to the 60-80% quintile just by graduating and working. So I'd agree that those bottom two quintiles are distorted by students (not sure how much though)
daviday 19y ago
the article is actually about how consumption -not income- is the best measure of financial well-being. http://www.nytimes.com/2008/02/10/opinion/10cox.html?_r=1&oref=slogin http://www.nytimes.com/2008/02/10/opinion/10cox.html?_r=1&#3...

24 points by alaskamiller 19y ago

deleted 19y ago

[deleted]

pg 19y ago

That is frightening: only the richest fifth save money. Or to put it another way, instead of saving, the poorer four-fifths live as much like the richest fifth as they can. I bet this was not always so in America, and I bet it is not so now in China.

ivankirigin 19y ago
In a consumer culture, where entertainment, experience, and stuff is what life is about, why would anyone save? What are you saving for? I would imagine with multiple huge revolutions in recent memory, people in China might have a reason for a different outlook. It is actually totally backwards, because a poorer nation can expect to grow at a much faster rate than a developed nation -- you just need to take off the brakes in the system for it to happen. If you ignore the shaky history, you'd have to be pretty dumb to save money when the economy is growing at 10% annually for a decade (unless that savings is in the form of investments, but it usually isn't)
- ken 19y ago
  If you turn off the TV for a few minutes, you'll realize that "entertainment" and "stuff" is not "what life is about", and experiences can be had on the cheap.
  - ivankirigin 19y ago
    I'm talking about trends in society, not my particular views. I don't think anyone can say "what life is about" (including you), but I think my comment was fair. Look at what people spend their time and money on, and you'll see what they care about. The richer people get, the more things become about experience, as opposed to consumer good consumption. "experiences can be had on the cheap." You're right. Back to the original point: why would people save if their priorities are about consumer good consumption, and then good experiences once they have all the stuff they want? More generally, I think the bias towards saving is a too abstract view about macroeconomic conditions. Credit is actually really, really cheap these days. Things are really cheap, and experiences can be too.
- deleted 19y ago
  [deleted]
- asdflkj 19y ago
  What do you mean by "take off the brakes"?
  - ivankirigin 19y ago
    Trade restrictions, high taxes, institutional corruption, ambiguous private property rights, lack of viability in contracts... You'd be amazed at how badly it seems some 3rd world countries want to fail.
    - pchristensen 19y ago
      But boy, take off those brakes and those countries can go fast! They get to use 150 years of Western industrial experiences and lessons learned without having to figure it out by trial and error.
    - asdflkj 19y ago
      How about a culture of violence and thievery? That takes decades of sustained effort to change, if not centuries. The things you've listed are merely symptoms. Saying that some 3rd world countries want to fail is like saying that endangered species want to go extinct.
jpancake 19y ago
You may also try reading it like this: only the fifth richest have money to save. Due to the inflexibility in cost of necessary commodities (food, housing) one may mistakenly read that as 'the poor trying to live like the rich,' but that is far from the case. Let's assume that you spend $200 a month (a fairly meagre amount) on food; that would be $2400 a year. And you also spend $600/month on rent (a fairly low/middling amount). That's $7200 a year. Combine the two and you get $9600. That's already >90% of the TOTAL income of the lowest bracket. The lack of savings among the poorer members of our society has less to do with trying to 'live like the rich' than with 'not being able to do so.'
- pg 19y ago
  Due to the inflexibility in cost of necessary commodities Really? So are all the people driving around in lowered SUVs with giant chromed rims rich? Or are you saying that lowered SUVs with giant chromed rims are a necessary commodity?
  - jpancake 19y ago
    I think it's cute that you skirted my main point. A car isn't a necessary commodity. Food is. Housing is. Cars aren't. For the poorest Americans, the necessary acts of eating and securing shelter consume the vast majority of their income. Secondly, what makes you think that someone who's driving a 'lowered SUV with giant chromed rims' can't afford it? Implicit racial bias? Why did you pick this example? Why not something closer to home: Did every douche in Silicon Valley with a BMW pay for it outright?
far33d 19y ago
This is ultimately why consumption taxes are a dangerous thing, despite how logical they seem. They are designed to create incentives for saving, but will merely punish those who have no ability to save in the first place. At the same time, it might discourage some of what you are describing (living larger than your means). I think that might be the case for some portion of the bottom fifth and a large portion of the second fifth (McMansions, leased cars, etc etc).
- byrneseyeview 19y ago
  Somehow, Americans had the ability to save fifty years ago, when they were much, much poorer. Did the cost of living go up radically since then? Or are they pretty sure that people who think like you will make sure they don't pay for their profligate nature?
  - pchristensen 19y ago
    According to the graphic with the story (http://www.nytimes.com/imagepages/2008/02/10/opinion/10op.graphic.ready.html http://www.nytimes.com/imagepages/2008/02/10/opinion/10op.gr...) the 50th percentile American had a fridge, a stove, electricity, and a radio. There's a lot more stuff to buy, and people value the convenience and utility of other stuff (Cell phone, washer, computer, internet) a lot.
    - byrneseyeview 19y ago
      In that case, I don't see why this is so bad. They value efficiency, so they borrow money and pay back the debt by working harder and more efficiently. I can see how investing in a refrigerator, stove, computer, and internet access would be worth it even if you put them all on a credit card at 20%; I wouldn't have a job without a computer and internet access, and I wouldn't have time to work without refrigerated food. Since this chart is careful not to adjust for age, we don't know if this is a story about 20somethings borrowing to start a family, 50somethings earning a lot of money at their peak careers, and 70somethings living off of the interest in their retirement accounts. In other words, this kind of chart could portray a totally egalitarian society in which everyone earns the same amount over a lifetime, but they earn it at different times. Thanks for adjusting the chart so there's no way to know that, NYT! I'm glad your writers don't have an agenda I should worry about!

mynameishere 19y ago

I won't speculate on the nytime's possible editorial status on the question of class politics, but the bulk of the disparity has to do with the fact that young people tend to go into debt, adults tend to earn and save, and old people tend to divest.

pchristensen 19y ago
Agreed. A couple years ago I was a married student with a kid and a $17K stipend, taking out $XX,000 in loans. Now I'm not borrowing any more money (well, except the house), paying back tons every month, and earning many times what I was then. In two years, I moved from the 20-40% to the 60-80% quintile just by graduating and working. So I'd agree that those bottom two quintiles are distorted by students (not sure how much though)

daviday 19y ago

the article is actually about how consumption -not income- is the best measure of financial well-being. http://www.nytimes.com/2008/02/10/opinion/10cox.html?_r=1&oref=slogin http://www.nytimes.com/2008/02/10/opinion/10cox.html?_r=1&#3...