Workers on the lower end of the income spectrum, earning less than $30,000 a year, spend a greater portion of their earnings on financial vices like alcohol, tobacco, gambling, and lottery tickets, according to a new survey by Bankrate.com.
And millennials (ages 23-38) spend more money annually ($1,741 on average) on alcoholic beverages than Gen Xers and baby boomers. Only the so-called silent generation spends more on alcohol: $7,982 a year, on average. Millennials also spend more of their annual income on smoking and playing the lottery than Gen Xers and baby boomers, according to Bankrate.
“Millennials are spending more on almost every vice. In general it makes sense. Millennials are younger and have more time to go out. They’re all about experiences, trying to enjoy their lives. And they have the ability to spend extra time in their lives with friends,” says Dixon. “As people get older, they have more responsibilities, more children to take care of,” she says.
Spending on financial vices can also be broken down by gender. Men gamble twice as much as women, spending on average $2,642 annually compared to $1,399 by women, the survey found.
‘People need to take a closer look at their budgets’
The survey found that low-income earners outspend workers making $80,000 or more in all four categories. And so while most Americans struggle to save $1,000 for a rainy day, such spending makes things even worse.
“Everyone has their vice but... people need to take a closer look at their budgets, and really make sure that they’re not overspending money on things that they shouldn’t be spending money on,” Bankrate.com analyst Amanda Dixon told Yahoo Finance.
Low-wage workers have seen their income rise faster than the rest of the labor force. This happened for the first time during the economic recovery in February. While earning more bodes well for economic advancement, spending habits are a better determinant of workers’ financial reality. Excluding those who don’t spend at all, workers making less than $30,000 a year spend on average 13% of their income on lottery tickets, 11% on alcohol, 13% on tobacco or e-cig products, and 4% on gambling, according to the survey. (Bankrate surveyed 2,377 adults who shared their household income).
Spending on these so-called vices is not a big deal, but moderation is key.
“People are going a bit overboard,” she said. “Things like alcohol, lottery tickets, they can certainly be cut out of somebody’s budget if they need to pay off credit card debt, for example.”
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