Last month, the US Bureau of Labor Statistics released important data about how Americans, rich and poor, spend their income.
While the two top items for both the top and bottom quintiles were housing and transportation, differences emerged from the third line item on down. The poor spend a much higher percentage of their income on eating in and keeping the lights on, while the rich direct a greater share of funds toward education and entertainment.
The crucial point, in our view, is education, since the top quintile is very consciously diverting funds away from consumption in order invest in their future, by introducing their children to ways of thinking and groups of people that are likely to benefit their lives and careers.
We regret to report that a comparison between 2012 and 1984 reveals less spending on books among both groups.
What they didn’t compare, of course, was how much Americans spent on investment advice then and now. With online investment advisors, that expense is also on the decline.
Photo – 401(k) 2012