Many of us have spent time daydreaming about what we'd do with a bigger paycheck.
Those plans are usually along the lines of buying a bigger house, a nicer car or a luxury yacht—the bigger the paycheck, the more money you have to inflate your lifestyle, right?
And yet, this isn't the pattern uncovered by the latest Consumer Expenditure Survey, recently released by the Bureau of Labor Statistics. The study illustrates the stark differences in how the various classes spend their money—and it turns out that wealthier consumers actually devote a smaller proportion of their income toward necessities like housing, food and health care.
To be sure, the total dollar amount that the rich spent on these purchases is higher—but the expenditures are a smaller percentage of their total income.
According to the CES, the wealthiest 10% spend 31% of their income on housing and 11% on food. By contrast, the bottom 10% devote 42% to housing and 17% to food—nearly 60% of their total spending.
In addition, the study looked at which costs hit which classes the hardest. Transportation, for instance, takes up a bigger share of the middle class' income than it does for the lower classes. Education follows a U-shape, which means it's most burdensome to the highest and lowest income groups.
As households become wealthier, there's also a pattern of spending more on entertainment—as well as on financial products. The bottom 10% spend 1.4% on things like insurance, annuities and retirement programs. The top, however, devote more than 10 times that percentage to this category—or more than $20,000 a year.
The differences in how each income group spends money also helps explain why specific classes are sensitive to certain economic fluctuations, such as rising gas prices, skyrocketing tuition, or boosts in housing.
Curious about how to keep your lifestyle spending in check? Check out these four ways to prevent your household costs from overtaking your budget.