According to the 2022 Schwab Modern Wealth Survey, Americans consider people with a net worth of $2.2 million to be wealthy and those with a net worth of $774,000 to be financially comfortable.
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While it is common to think of the wealthy as people who drive fancy cars or carry expensive designer handbags, the details of their spending habits tell a different story. The wealthy enjoy vacations but also manage a portion of their wealth to generate more wealth through their investment accounts.
The wealthy invest in retirement regularly, and they also invest in education. They take care of their health, and more often than not, pay their health care bills without incurring medical debt. They also like to buy quality products and food.
Here are the things the rich spend their money on that the poor and middle class don’t.
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Whole Foods
Tom Corley, financial expert and author of “Rich Habits: The Daily Success Habits of Wealthy Individuals,” spent five years studying 233 millionaires. What he found was that millionaires spend money they see it differently, especially when it comes to food.
According to Corley, the wealthy prioritize their health by buying whole, organic foods. According to his data, 97% of poor people eat more than 300 calories of junk food a day, while 70% of rich people eat less than 300 calories a day. He also found that rich people exercise more often than poor people.
High quality products
Corley’s research also shows that wealthy people tend to buy more expensive clothes and accessories. They avoid buying fast fashion or cheaply made goods in favor of long-lasting clothes or furniture. Even if high-quality products cost more, the rich prefer products that last a long time rather than cheap ones that need to be replaced frequently.
Experiences and Events
According to consumer spending data from the Bureau of Labor Statistics, the wealthy spend the most on entertainment, a category that includes fees and admission to sporting events, concerts and museums. It also includes household toys, hobbies and playground equipment.
Pets
Although there are approximately 218 million pets in the United States, the way people spend their pets varies by income. According to data from the US Bureau of Labor Statistics, people with incomes in the highest quintile spend four times more on their pets than those in the lowest.
Retirement
Data from the US Government Accountability Office highlights the disparity in retirement account savings based on income level.
On average, people aged 51-64 in the highest income bracket had retirement savings of about $605,000. The median income quintile was much lower, at about $100,000. Finally, the lowest income earners had about $75,000 in retirement income.
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Not surprisingly, the data showed that workers with higher incomes put a larger percentage of their salary into their retirement accounts. In other words, the rich make sure that they use a percentage of their earnings to grow their wealth even more through investing.
Education
It’s no secret that getting an education is still expensive. Interestingly, the top 1% of income earners spend about 6% of their income on education; the middle class completes more than 1% of education.
When referred to as “invisible spending,” spending on education is more than just the cost of college. Instead, it can include private tuition for their children from primary school onwards.
Health care bills
Americans of all socioeconomic groups have health care costs, but how the wealthy pay for their health needs is different than the middle and lower classes.
According to a report from Third Way think tank, about 13% of high income earners have unpaid health care bills. About 24 percent of middle-class people have unpaid bills and 22% of low-income Americans have unpaid health care bills.
The report highlighted that the middle class is most affected by medical debt even if they have good health insurance, possibly because they may not qualify for medical assistance programs.
Frequent Holidays
Data from the Bureau of Labor Statistics showed that wealthy Americans spend the most on the holidays. The highest earners spent about $4,540 on travel in 2021 versus $466 spent by the lowest earners.
Tour costs include meals on tour as well as alcohol, accommodation, transport and entertainment. Although spending in this category has fallen significantly across all income levels during the pandemic, it is rising again.
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