According to the 2022 Schwab Modern Wealth Survey, Americans consider people with net worths of around $2.2 million to be wealthy and those with net worths of $774,000 to be financially comfortable.
Although it’s common to think of the wealthy as people who drive flashy cars or carry expensive designer bags, data on their spending patterns paint a different story. The wealthy enjoy vacations but they also direct a portion of their wealth to create more wealth via their investment accounts.
The wealthy invest in retirement consistently, and they also invest in education. They take care of their health and, more often than not, pay their healthcare bills without incurring medical debt. They also tend to purchase high-quality products and food.
Healthy Food
Tom Corley, a financial planner and author of the book “Rich Habits: The Daily Success Habits of Wealthy Individuals,” spent five years studying 233 millionaires. What he found was that millionaires spent their money differently, especially when it comes to food.
According to Corley, the wealthy prioritize their health by purchasing whole, organic food. According to his data, 97% of poor people eat over 300 calories of junk food per day, whereas 70% of wealthy people eat less than 300 calories of junk food per day. He also found that wealthy people exercised more frequently than the poor.
High-Quality Products
Corley’s research also showed that wealthy people were more likely to purchase high-quality clothing and furniture. They avoid buying fast fashion or cheaply made goods in favor of clothes or furniture that last much longer. Even if high-quality products cost more, the wealthy prefer longer-lasting products to cheaper items that have to be replaced frequently.
Experiences and Events
According to consumer expenditure data from the Bureau of Labor Statistics, the rich spend more on entertainment, which is a category that includes fees and admissions to sporting events, concerts and museums. It also includes pet toys, hobbies and playground equipment.
Pets
While there are approximately 218 million pets in the United States, how people spend on their pets varies depending on income bracket. According to U.S. Bureau of Labor Statistics data, people with incomes in the highest quintile spend over four times more on their pets than those in the lowest quintile.
Retirement
Data from the U.S. Government Accountability Office highlights the disparities in retirement account savings based on income level.
On average, people aged 51-64 in the highest income quintile had retirement savings of approximately $605,000. The middle-income quintile was much lower, at approximately $100,000. Finally, the lowest income quintile had an average retirement savings of around $75,000.
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Unsurprisingly, this data showed that high-income workers contributed larger percentages of their pay to their retirement accounts. In other words, the rich make sure to spend a percentage of their incomes growing their wealth even more through investing.
Education
It’s no secret that getting an education is becoming more expensive. Interestingly, the top 1% of earners spend almost 6% of their income on education; the middle class spends just over 1% on education.
Dubbed “inconspicuous consumption,” educational spending does not just refer to college expenditures. Rather, it can include private education for their children from pre-school and beyond.
Healthcare Bills
Americans of all socioeconomic classes have healthcare costs, but how the wealthy pay for their health needs differs from the middle and lower classes.
According to a report from the think tank Third Way, approximately 13% of higher-income people have unpaid healthcare bills. Nearly 24% of the middle class have unpaid bills and 22% of lower-income Americans have unpaid healthcare bills as well.
The report highlighted that the middle class is hit hardest with medical debt even if they have good health insurance, likely because they might not qualify for medical assistance programs.
Frequent Vacations
Data from the Bureau of Labor Statistics showed wealthy Americans spend considerably more on vacations. The highest quintile of income earners spent approximately $4,540 on travel in 2021 versus the $466 spent by the lowest quintile of earners.
The cost of travel includes food on trips as well as alcohol, lodging, transportation and entertainment. Although spending in this category dropped substantially for all income levels during the pandemic, it is on the rise once again.