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Your Financial Life
By Brian Forbes / Mar 24, 2014

American Consumer Spending Statistics: We Spend Too Much

consumer spending

American culture has introduced rock and roll, baseball, blue jeans, fast food and Hollywood to seemingly every corner of the globe. One thing we’ve largely kept to ourselves, however, is our appetite for consumer spending.

We may not technically need the latest smartphone, car model, or a daily non-fat, no foam, two-pump, double cup, extra hot vanilla latte, but these things often make us feel good, or are a part of our routine.

Although spending makes the U.S. economy go ‘round, it has a potentially devastating effect on our retirement savings and preparation for the future.

Consumer Spending Is an American Thing

A new survey found that only 68 percent of Americans are spending less than they earn and saving the difference. Said another way, nearly 1 in 3 Americans are not saving any money. That’s down from 73 percent in 2010 when the Great Recession jolted people back to reality. Just 64 percent of households have emergency funds, down from 71 percent in 2010.

spending_too_much_quote Sheldon Garon’s 2011 book, Beyond Our Means: Why Americans Spend While the World Saves, examined how our aversion to saving is cultural and structural. Meaning, while we are bombarded with marketing designed to separate us from our good sense and cash, we also lack access to incentivized savings institutions and can often get credit too easily.

“The only people who come close are people in Britain, but they are about 85 percent of the level of American consumption,” Garon said in an interview with NPR. “Germans, French and others are in the 70 percent range, Japanese even a little lower. So Americans spend like no one else.”

3 Ways to Reign in Your Spending

Recognizing there could be a problem is an important first step. Here are three more steps from a recent article in the Wall Street Journal:

1. Have a Plan When You Spend

If you’ve ever tried to budget, you know it can be eye-opening and depressing. We spend without thinking, and when we see what we spend we often feel guilty or constrained.

Whether it’s writing everything down, or using only cash for a month, the idea is to see where your money goes and get emotionally attached to it leaving your hand. You need a plan – maybe it’s a 7-day challenge like this. And you need to go through the emotions of sticking to it, which brings us to …

2. Understanding Your Emotions

Many of us spend to fulfill some kind of emotion. Add your credit card, and whims become “what the!” moments. Some experts would recommend you see a counselor or personal coach. Another useful tip: wait 24 hours before making a purchase, this might lessen the tingle and give you a chance to think more about the purchase.

3. Know Your Hot Buttons

We all know stores that entice us into impulse spending. This is where a budget can help. You can still go to that store, but you walk in knowing what you can spend.

Financial planners will also recommend you create a savings goal – a new house, luxury item or vacation. This will help you have a positive experience when cutting back, and that just could lead to a new habit of saving more than you spend.