Data from the U.S. Bureau of Labor Statistics shows how each generation of Americans is spending their money.
The average American spent little over $60,000 annually in 2021. Where does all of their money go, though? Unsurprisingly, different age groups have very different spending habits.
According to the graphic prepared by Preethi Lodha using data from the U.S. Bureau of Labor Statistics (pdf below), there are significant differences between generations in how the average American spends their money (and annual expenses).
A Generational Breakdown of Overall Spending
Gen X (those born between 1965 and 1980) spent the most money overall in 2021, with an average annual expenditure of $83,357.
Because many individuals in Gen X are financially supporting both their ageing parents and their own children, this generation has earned the moniker “sandwich generation.”
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Millennials rank second in terms of spending, with an average annual expenditure of $69,061. Housing, healthcare, and personal insurance make up this generation’s top three spending categories, just like Gen X.
On the other end of the scale, Generation Zers spend the least on average, at $41,636 annually. Given that they will still be in the initial stages of their jobs and that the oldest Gen Zers will just be 25 in 2022, it is anticipated that their spending patterns would increase.
Similarities Across Generations
Age-related differences in spending habits are present, however some areas of spending are rather constant.
Housing is one of the most stable spending categories; it represents more than 30% of all annual spending across all age groups and is by far the largest expense.
Surprisingly, entertainment is another cost category that remains constant throughout generations. For amusement, all generations spent more than 4% of their overall spending, but none spent more than 5.6%.
The fact that Gen Zers spent the least on entertainment could be attributed to the types of entertainment that this age prefers. For instance, a study indicated that only 15% of respondents aged 13 to 19 watch cable TV, whereas 51% of them watch videos on Instagram on a weekly basis.
Differences Across Generations
Spending on healthcare is one area where there are the biggest differences across generations and relative needs.
The table below reveals that the average healthcare expense for members of the Silent Generation was $7,053, or 15.8% of their overall average expenditure. Gen Z spent only $1,354 on average, or 3.3% of the overall average, in comparison.
Although younger generations tend to spend less on healthcare, they are also less likely to have health insurance, which means that individuals who do fall ill may be saddled with a sizable bill.
Read the report given below: