Family Income and Household Expenditure Patterns


Consumer household expenditure varies by the income group. Spending patterns also differ by age of household and work status. For example older workers allocate more to retirement, pension, and Social Security funds. US Department of Labor collects household expenditure data based on the income level. We have used two income groups (high – annual income – US$90,469 and medium – annual income US$39,100) to discuss expenditure patterns.

This data provides some very useful insight into the spending habits and financial priorities of different age groups. This data also explains disparities related to food and housing expenditure among various income group.

Here are some of the key facts based on the data gathered by US Department of Labor.

Housing Expenditure

Homeowners on average have more income than the renters but at the same time, additional housing expenses such as taxes, insurance and repair cost tend to level the overall expenditure in terms of percentage of their income. Medium and low income households take hardest hit due to additional expenses related to the homeownership. One interesting finding was that real estate taxes, insurance and repair expenses make up a significant portion of overall expenditure for small and medium income groups as compared to higher income groups. Another key finding was that while there is an income gap of 130% between high and medium income households, housing expenses only went down by 3% of total available income. This allows high income group to retain and allocate more funds to other categories such as entertainment and insurance.

Food Expenditure

Medium income group spent 14% of their household income on food as compared to 11% for high income group. While these numbers seem comparable, real difference becomes apparent when you work with absolute values. For example, high income household spent $9,955 on food as compared to $5,460 spent by a medium income household. In absolute terms, high income household spend 182% of the money spent by medium income household on food. These numbers are even more staggering if we compare high income households to low income households.

Health Care Expenditure

While most US workers have come to expect employers to pay for some part of employee health insurance; recent economic trends have resulted in a growing disparity in health care coverage and affordability. As evident from the data, the high income group has enjoyed rising incomes and growing employer-paid health care benefits, which have made their out-of-pocket spending on health care a relatively small and affordable portion of total spending. On the other hand, the medium income group has seen health care benefits and incomes growth at a much slower rate, making the uncovered portion of their health care costs ever-more expensive. In summary, in case of medium income workers, their employers are less likely to pay for their health insurance. This has resulted in additional burden on their disposable income to cover health care expenses. This group is finding any health care difficult, if not impossible, to afford.