To help people identify new ways to save for retirement and change problematic spending behavior before it's too late, Personal Capital, an online financial advisory firm, has released its inaugural “State of Spending” Report.The report identifies American spending behavior and saving, specifically examining spending behavior that contributes to everyday cost of living, such as food, clothes and transportation.
"We're experiencing a volatile market that is out of our control, but our incremental day-to-day spending is something we do have control over. And more importantly, daily spending habits have a real impact on the amount of money we need to retire," said Bill Harris, CEO of Personal Capital. "Our goal is to help more Americans understand how small, repeat spending decisions affect their financial standing down the road.”
To obtain data, Personal Capital analyzed the bank accounts of dashboard users for spending trends on a completely anonymized basis. Spending behavior and patterns were calculated across 148,225,107 transactions in total. All of these transactions occurred in 2015. Most of the data is comprised of simple sums and counts. Categories for spending were gleaned from our transaction service provider.
So how does your small, repeat spending behaviors compare to other Americans? In what areas can you stand to cut back?
- Restaurant Spending on The Rise
Americans aren't holding on to their purse strings when it comes to dining out. In fact, people eat out for dinner roughly 14 times per month, with 20-30 year olds spending 60% of their food budget on restaurants, more than any other age group.
- Simple Costs Add Up
America runs on Starbucks—people visit the chain more frequently than other coffee giants throughout the year and spend on average 137% more per transaction than at competitors like Dunkin' Donuts and 129% more per transaction than at Peet's Coffee.
- Convenience Trumps Cost
People use ride-sharing apps more frequently than Yellow cabs, specifically requesting Lyft rides 5 times more than Yellow cabs, and Uber rides 7 times more than Yellow cabs on average.
- Buying in Bulk Beats Gourmet Grocers
When it comes to everyday grocery shopping, Americans frequent Kroger the most, over twice a month. Yet they spend the most at Costco, averaging $151.71 per month – that's roughly 50% more than they spend at Kroger and two times more at Safeway, Trader Joe's and Whole Foods.
- Wallets are Open at the Mall
For an average shopping trip, Americans spend bigger bucks at Bloomingdales than other top clothing retailers—averaging $206.95 each shopping trip compared to Sears ($171.38), Nordstrom ($149.06) or Macy's ($106.47). People's monthly spend at Nordstrom is $83, while monthly spend at Bloomingdale's and Macy's are $77 and $42 respectively.
For a deeper dive into how Americans are spending, and to see what each state spends or saves the most on, visit The State of Spending Map.
One of the benefits of this report is that it provides a menu of options on where individuals can stand to spend a little less or a little smarter, both which can affect the size and security of retirement.
If you’d like to better understand ways to save for retirement, consult your financial advisor. If you’d like to know more about how you can reduce your medical student debt, call us today at (844) 226-LINK (5465). We’re here and happy to help.