While many Americans say they can’t afford to save for retirement and other financial goals, new research suggests many of us have more disposable cash for financial priorities than we think.
Life insurance platform Ladder commissioned opinion research firm OnePoll to survey 2,000 Americans about their spending habits. What they found is Americans on average spend $1,497 per month—or nearly $18,000 per year—on non-essential items while often falling short on essentials, such as savings. Over one’s lifetime that could add up to more than $1 million—money that could ensure a comfortable retirement.
Most of the non-essential spending goes toward eating out, with Americans spending on average $787.28 per month. The breakdown of that is as follows:
- $209.38 for dinner at restaurants
- $188.68 for drinks with friends or co-workers
- $177.88 for takeout or delivery services
- $173.62 buying lunch
- $20.25 for coffee
- $17.47 for bottled water
Other common non-essential purchases include non-essential rideshare trips ($96.11), subscription boxes ($93.96) and cable ($90.57). A sizable portion of consumers’ non-essential spending is unplanned, as respondents spent on average $108.97 on impulse purchases.
Yet despite consumers’ ability to find money in their budgets for dining out and coffee, 58% say they have struggled to come up with funds to pay for financial goals that will impact their lives greatly in the future. For example, 38% of respondents said they could not afford to put any money into a retirement account, and 35% said they could not afford life insurance. Of survey respondents who do not currently have life insurance, 52% said the reason was because it was too expensive.
Americans’ spending habits are also impacting their living situations today. Approximately 28% said they feel they can’t afford to pay off their credit card bills, which suggests some money that can be used for long-term financial goals is being eaten away by interest. Also, 26% said they feel they can’t afford car repairs—which could lead to more credit card debt—and 24% said they don’t think they have enough money to own a car.
The good news is Americans recognize that they have the power to make a change. An overwhelming 70% of respondents said they could be smarter with their money. One way many could be money-wise is through budgeting; 24% of respondents admitted they don’t currently have a budget.
While there’s nothing wrong with splurging occasionally, it’s important to make sure ‘needs’ are met before spending money on ‘wants.’ Long-term financial planning is also key if you want to make sure you have enough money for yourself and your family in future years so you should budget for retirement savings and life insurance before designating money for coffee shops and restaurants. When considering life insurance, you’ll want to weigh factors like your current debts and the ages of your children to determine how much insurance you need. Likewise, you’ll want to check in regularly with your financial plan to make sure you’re saving enough for retirement.