9 Ways Americans Are Spending Differently (but Not Less)
Many Americans say they are spending less in this post-recessionary period. But their actions tell a different story as formal reports indicate that consumer spending is rising.
We may think we are spending less because we are exercising frugality in one area of our lives. But in many cases, we are simply changing priorities and shifting expenses. So, just because we are spending less in one category doesn’t mean that our budgets are perfectly balanced. (See also: Find Your Hidden Spending Habits and Save)
It’s useful to consider where Americans are spending less and where we are spending more:
1. Less on Apparel and Footwear
According to a recent report from the Bureau of Labor Statistics, spending on apparel, footwear, and related services was down slightly in 2012 compared to the previous year.
The popularity of consignment and thrift shops, with their lower prices, may be behind part of the lower spending in this category. Fashion deal sites, such as 6PM.com and ShopItToMe.com, may also be contributing to this trend. (See also: 17 Sites to Get Discount Designer Clothing)
2. More on Jewelry and Appliances
Americans are putting their money toward items with longer useful lives, such as appliances and jewelry, rather than fashion clothing that may last just a few years.
3. Less on Housing and Mortgages
Young adults are spending less on housing and mortgages, according to PewResearch Social & Demographic Trends. Many are renting rather than buying a home or living with parents rather than living on their own.
4. More Student Debt
Student loan debt is rising as more borrow to attend college and costs increase. According to a research project of The George Washington University, student debt has risen nearly 280% since 2003.
Even as debt has declined in other categories (such as mortgages and credit cards), loans associated with education have increased.
5. More on Cars, Unless You Are a Young Adult
Automakers Ford, GM, Chrysler, Toyota, and Tesla Motors reported higher sales to retail buyers in August, according to a Forbes article. One auto executive points to pent-up demand as we may have delayed spending during the recession, only to purchase a vehicle now that our finances seem more stable. (See also: 7 Sites You Must Visit When Buying a New Car)
However, car ownership and vehicle debt among young adults is falling. For starters, fewer teens are getting their driver’s licenses at 16. Reasons for less interest in driving and consequently lower demand for a car include better availability and more acceptance of public transportation, easier access to rides and friends via social media, and the high costs of owning a vehicle.
6. More on Children
Spending on children among parents of all income levels has been rising over the last few decades, according to a 2012 report on changes in parental spending on children.
Notably, teenagers were the prime recipients of parental spending prior to the 1990s. After that time, though, parents spent the most on children under age 6 and those in their mid-20s.
Parents may not be spending on vehicles or funding college education for their teens but they are more likely to be paying expenses for their young adult children.
7. More on Entertainment
Americans are spending more on entertainment. Expenses in this category grew 58% from 1995 to 2011 according to the White Hutchison Leisure & Learning Group. And this upward trend continued in 2012.
The mix within this category has changed over time. While location-based entertainment and admissions to sporting events declined, mobile and in-home entertainment has increased.
8. More on Food
Over the past few years, Americans have been spending more on food according to a Mint.com analysis of account holders’ spending habits.
Grocery spending is up 17%, most likely due to rising food prices in general as well as the popularity of premium items. Restaurant expenses have increased 11% with those under 36 years old spending nearly 40% more. For details on how people in your state spend, see this infographic.
9. More on Travel
Overall, travel spending is expected to increase by over $1.5 billion this year. Though fewer Americans planned to travel this summer, vacationers planned to spend more overall than last year, according to a market research firm.
But Is Different Better?
Many times, we consciously move spending from one category to another so that our habits are better aligned with our values and current needs. The danger comes when we believe we are being prudent because of lower expenses in certain areas when we are merely moving money around.
For example, since mid-August, I have been spending less on groceries because my oldest son is away at college. Food lasts longer, nightly dinner portions are more modest, and my weekly trips to the grocery store carry a smaller bill. My lower grocery costs make me think that I am changing my spending habits overall for the better.
However, a glance at our family’s outlays indicates that these are merely shifts in spending, as expenses for my son’s college tuition, books, and living expenses at school outweigh savings back at home. (See also: How to Score Free Textbooks)
You may have also noticed a shift in your expenses, whether you are reacting to a change in economic conditions or personal circumstances. You may be dropping fewer dollars on entertainment out of the home while increasing your spending on baby-related supplies after your first child was born.
Some shifts in spending can’t be avoided, like the trade-off in groceries for tuition, but others ought to be noticed, monitored, and controlled.
Are you spending less money? Does shifting expenses help you spend on what’s most important to you? Or, do you scrimp in one area only to lose control in another?