Many people are guilty of spending money on luxuries and think of it as treating themselves when they have extra money to do so. Those on a low income might find it hard to enjoy such luxuries due to financial limitations. But a recent study discovered that many low-income families actually spend a lot of money for luxury, which could cause bigger problems.
In a recent study conducted by Deutsche Bank Research in late 2017, they studied the spending habits of Americans. It's not surprising that the researchers found out that more high-income earners are more likely to spend money for luxuries.
However, the data also showed that low-income families spend a significant amount of their income on luxuries. This could be risky for them to meet their essential needs such as food, housing costs, and bills, which means they would have to find debt relief to get themselves out of a financial problem.
The results of the research show that the high-income earners tend to spend 65 percent of their income on luxury and the remaining 35 percent on necessities and essentials. For middle-income earners, moreover, there is a 50-50 percent split on spending.
Furthermore, it is found that low-income earners spend around 40 percent on luxury and 60 percent on necessities. Although it's relatively lower than the middle- and high-income earners, it is still considered a very high percentage.
In a prior survey, it was found that splurging on luxuries is connected with one's emotions. About half of Americans admitted that they buy things they couldn't really afford because of their emotions at that moment.
It was also implied that families on a low-income tend to overspend due to higher stress levels than higher-income earners. There is an evident connection between financial and stress-related issues, the reason why more people who are under stress are more likely to splurge on things they can't afford. Consequently, they become more stressed due to financial problems which could cause higher stress levels.
The same survey found out that 86 percent of Americans believed it is alright to go into debt for necessary spendings such as hospital bills or emergencies. 87 percent of Americans, however, answered it would be too embarrassing to get into debt for spending on luxury or unnecessary things. Yet still, many people spend on things they can't afford and then end up in a financial trouble.
