How Americans spend their money - WTVM.com-Columbus, GA News Weather & Sports

How Americans spend their money

Americans are able to buy clothing relatively cheaply, and thus can buy more. (©iStockphoto.com/Dmitriy Shironosov) Americans are able to buy clothing relatively cheaply, and thus can buy more. (©iStockphoto.com/Dmitriy Shironosov)

By Janine Eccleston

Compared to other countries, the United States spends the most on housing and healthcare and the least on food, clothing and transportation. The question is why do Americans spend so much on housing and so little on food? What factors come into play on determining the price of these necessities?

Healthcare

Americans pay more for healthcare. In fact, Americans pay nearly double that of the majority of other countries on a per capita basis. Countries with subsidized healthcare pay significantly less per capita and are able to allocate their funds elsewhere.

Transportation

If you compare American transportation costs to that of the Japanese and the British, they look high. Simply put, North Americans just walk and bike ride less than those in Japan and Britain. The metro system in Europe is outstanding and things are a lot closer together in both countries. This makes it easier, and more practical, to walk and ride your bike. In turn, this saves Japanese and British citizens a lot of money.

If you compare the United States to Canada, you will see that fuel is another cheap commodity. On average, Americans pay a lot less than Canadians for fuel. At almost any given time there is a dollar or more gap between a gallon of gas in the U.S. and a gallon of gas in Canada.

Food

According to The Atlantic, Food in the United States is highly subsidized (corn subsidies), and it is cheaper than in many other countries. Large quantities of inexpensive food are readily available to Americans. However, the food items available may not be the healthiest option and may attribute to increased obesity rates. Foods such as potato chips are easy and cheap to produce and may end up being a cheaper alternative than fresh fruits and vegetables.

Fast food is a great example of how convenience has become a less expensive option. Going to McDonald's or Wendy's has become second nature to some Americans and some would argue that it's actually cheaper to eat out than to cook at home.

Housing

Americans put a large amount of their paychecks towards their housing costs. An infographic from The Financial Post, published in June, shows that Americans pay roughly $4,500 for rent (two bedroom luxury in New York), while their Canadian counterparts only pay about $2,200 (two bedroom luxury in Vancouver). There are many other large American cities that are extremely expensive to live in.

Clothing

Clothing is also an area where Americans pay less. Large corporations have the ability to mass-produce goods and are therefore able to sell them for less. Many malls in the United States have outlet stores that sell articles of clothing for a fraction of the price the clothes would be in the main store.

Americans are able to purchase clothing for relatively less, and as a result they are able to buy more. If a consumer was to feel satisfied after purchasing five shirts then he or she would reach this level of satisfaction for less capital in the United States than in neighboring countries. This might influence why Americans spend less on clothing than other countries.

The Bottom Line

In the end, consumers spend differently because of the values they were taught and the relative costs of the items in their countries. What is expensive in one country may be cheap in another. Certain countries may value bigger homes, while others value fresh food. Perhaps Americans spend the way they do because they are building their American Dreams. It has been ingrained into us to want the biggest and best of everything.

Originally posted on Investopedia.com 

INVESTOPEDIA ULC ©2012

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