The Average American Spends $3.3M over Their Lifetime (2024)

Keep in mind that zero Americans were actually surveyed to arrive at this figure. The methodology was simply extrapolate from price indexes of things we think people pay for.

https://www.onemainfinancial.com/personal-loans/where-americ...

> Our greatest ongoing financial priority is our home, with the average cost of a single-family house totaling $428,700,” the study states. “Americans tend to change residences every 15 years, pushing the average amount borrowed on housing to a staggering $1.5 million in a lifetime.”

Why are they counting homes like that? If I sell and buy my investments in my 401k, they don't count it twice.

So if you get a 30 year mortgage on $330k loan at 6% the total cost of the loan is $700-something-k. Go through three houses, reseting the 30 years a couple times, maybe while getting a bigger house, end up paying for 50 years, and it doesn't seem that hard to hit a million something.

That said, I super suspect the numbers might be averages of a multi-modal distribution...

I'm guessing because of the tendency to buy to a payment. People don't generally move to the same price range each time.

Unfortunately, there's a tendency for this to become a hidden robber of wealth over time.

Sure, but after people stop working it's common for them to replace their working income with Social Security, other pensions, and withdrawals from retirement accounts in which their savings compounded over time.

And the median household income is actually $75k now. I'm just saying that $55k is very much in the ballpark for the median person. Does it really matter if that's before or after taxes?

> Sure, but after people stop working it's common for them to replace their working income with Social Security, other pensions, and withdrawals from retirement accounts in which their savings compounded over time.

Agreed, but there was no room for savings in your model as you used the whole income as spending (median income * 60 years). Taxes makes a big difference too since it doesn't count as spending. E.g. someone that earns 55K$, pays 25K$ in taxes and saves 10K$, only spends 20K$ per year, amounting to 1.2M$ (20K$ * 60 years).

$25k in taxes on a $55k income? Where are you from?

For a family in 2024, at the Federal level, the first $29,200 is untaxed because of the standard deduction. The remainder would be taxed at 10-12%. Child tax credits can easily wipe that out and make the liability negative (i.e. you get all your tax withholdings refunded plus another couple thousand dollars).

State income taxes will vary, but are typically lower than Federal income taxes. Many have no income tax.

Good catch; I overlooked that line. I think we can take that as further proof that this article is not worth our attention.

"401k" is obviously not an "expense" independent of the things that 401k savings are actually spent on (I mean, unless one is counting the expense ratio on their mutual funds).

What are you doing here? This post is about American spending.

Every single post of yours is about China. We get it, you don't like China. Stop polluting threads with offtopic garbage.

In Chinese threads, there are always people bringing up America. Why can't it be the same here?

Also, it's a free country (that this site is hosted on)

I don't know what "Chinese threads" you're referencing, but I would have the same response to that scenario: It's off-topic, and doesn't belong.

Nice quip though.

I feel like there are some really good core principles that could be extracted from this. There's a really strong tendency to overstate the importance of repeated expenses and understate the absolutely critical nature of strategic expenses.

The financial world is littered with bad advice in this area.

Maybe it is time for something like a new motley fool to encourage appropriate foolishness.

To me the core idea is just keep a double entry ledger. This not only helps you observe all your transactions and their cost centers, but it allows you to put long term spending habits into perspective. To your point, it allows you to correctly measure the value of your recurring expenses, and it gives you the confidence necessary to spend strategically.

Maybe it is time for schools to teach exceptionally basic and incredibly useful life skills.

I would be more interested in the median.

Also note that, as a back of the envelope calculation, $15/hour x 40hour/week x 52week/year x 40years = $1.248M.

Right I guess the most realistic thing about this calculation is that people who make 15 an hour have no vacation cause they can’t afford to vacation. Let’s play it out:

After taxes probably looking at closer to 900K. After paying off a 30 year mortgage, probably left with 500k? For simple math let’s say I 400k over 40 years that’s 10k left over per year to cover food and all the necessities of life. They’re living on a knifes edge and an inevitable emergency completely derails them.

>They’re living on a knifes edge and an inevitable emergency completely derails them.

I know what you mean, $1.248M sure doesn't buy what it used to any more.

I look around at my neighbors, my friends... everyone must be doing better off than me OR everyone is just constantly living in debt and considering a car payment a permanent "tax to live" because I see people with new cars (if used, very late model) everywhere.

I am terrified of one of my cars breaking (both Toyotas, thankfully, fingers crossed, knock on wood). I dread having to buy another car when these are done.

Haha, I feel the same way when I compare with my neighbors! I have a “really decent” job in tech, and live comfortably, but my family does it by living in a modest sized home, driving a 15 year old car, 7 year old phone, and basically never taking vacations. But when I go drop my kid off to visit her friends, everyone’s got ginormous homes, some on acreage, beautiful furniture, 0-3 year old cars, all the latest gadgets, photos from last year’s trip to Cancun… and they’re nurses and electricians. Not that I feel I’m better than them because of my career but jeez how do they afford it all???

I’m glad I don’t have the “normal” urge to Keep Up With The Jones’s because I’d be broke!

I suspect a decent percentage of people with newer cars are leasing, since many people shop for a car based on monthly payment without considering the long-term costs.

Also, unrelated heads up since you mention older Toyotas: there's a new recall on Takata airbags from certain 200x models.

https://text.npr.org/2024/01/30/1227923226/toyota-warning-ad...

My kid’s afterschool care costs more than my monthly car payments + insurance (and I have a pricey new EV). If he was still in daycare, I would get creamed even harder. Thankfully this might end in a few years, but daycare costs are no joke, and then there are lots of activity costs.

I guess it depends on how often you buy a new car, some people get new cars every 3-4 years.

If you exclude third-party childcare, kids aren't that expensive in direct costs. So a typical family with an at-home caretaker sending the child to a public school and going on local vacations on their, well, car might indeed end up spending more in cars than the child.

Kids are very expensive, however, in opportunity costs - but that wouldn't appear here.

Not sure that the 1% (or 0.1%) isn't skewing the average. Would love to see what the median American spends over their lifetime.

What I'm saying is that the 400 billionaires in the Fortune 400 are likely pulling the average up.

It’s the opposite actually. Very Rich people consume far less than average in proportion to their wealth and income.

When you look at what people actually consume, the US at least looks very egalitarian.

I would be interested in reading any papers or studies that support that statement. Because of where I live I happen to know quite a few people who are in the "upper 10%" some probably better than that, and pretty much they universally spend more on maintaining one or more additional real properties, a plane or boat with its maintenance, and generally many more days out of the year travelling and paying for hotels/meals etc than what I consider "average". Sure they shop at the same grocery stores as everyone else, and they don't necessarily spend any more on those groceries, but they do eat out more and at places that I would not consider "budget". In general, their lifestyle has a higher "burn rate" than people for whom such an expenditure rate would result in a rapid decline of their net worth.

But the problem with the original article (which was pointed out elsewhere that the number could be arrived at by multiplying the median salary of $55K by 60 years, is that without the methodology by which they reached the number, and statistics that better describe the "shape" of the data set, its kind of hard to take anything away from the statement of "$3.3M on average" that is at all meaningful.