Intersting But Useless Budget Numbers

Finance

Is comparing you to ultimately others an advisable endeavor? Bank or investment company of America has some odd infographics that they toss at you when you log off (I haven’t closed my accounts yet, as I am still traveling). This one about the “average family budget” is one of these. It really is, of course, part of a pitch for their investment guidance services, and there’s a helpful link privately pub to “get you started” getting the shit together.

Because no matter how you take a look at these numbers, you think you are not doing something right probably. 60,000 a year. If you make significantly less than this, you feel inadequate. If you make more, you wonder where the hell all your money is going! No matter how you slice it, the data is not so useful.

How did they understand this data? Was it called or self-reported from some database? Their own database Perhaps? Would it include people on welfare as well as Billionaires? If so, these amounts may be skewed – or meaningless. Without information as to how the data was collected, it is kind of worthless.

Moreover, what is an “average” family? It depends on whether you reside in Salt or Manhattan Lake City. For many people, this number might be ridiculously low – significantly less than their mortgage repayment. If you throw in utilities, taxes, insurance, and repairs, the actual cost comes out to far more. The transportation numbers seem plausible – for a family with one car.

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8000 a year on an automobile. The healthcare thing is also misleading. Per month on medical health insurance 400, but pretty soon, this will double when I switch to Obamacare. A family of four? I suspect a lot is paid by them more than I do. And so forth down the comparative series. 600 per month on “pensions and personal insurance” whatever that means (instead of corporate insurance? WTF?).

7200 a 12 months to their pension plan, which sounds implausible if you ask me fairly. Do not get me wrong, it would be a good thing if people did this. But the true numbers I am reading the paper seem to tell another story. Well, that is another exemplary case of bad data as well. 91,000, but careful reading implies that it’s the average of 401(k) programs at Fidelity only. And no term on individuals who have no keeping plan whatsoever.

If you average in every those zeros, well, the real amounts look different. Just how does my “average family” build up against BoA’s mythical average family? 600 on restaurants and liquor. 1200 a month, or about double what BoA says is average. Again, I suspect they rely on self-reported data, and most people report what they think they devote to groceries alone merely. 899, but since I own two cars that are depreciating, I can reliably estimate the actual cost is about double that.

3000. Again, however, we aren’t talking about overall transaction costs. If we element in appreciation, the regular cost may be lower. Up to now, my present house has been level in the value pretty, so this is not just a factor yet. But for others, it could affect the “monthly cost” computation.

BoA is talking cash-flow, and I’m talking overall cost – real costs, which are more important than cash-flow far. 365 which is spot-on to my current pre-Obamacare health plan nearly. 365 for a family – with kids especially. Education: My balance is zero, as I paid my student education loans about a decade ago, and have no kids to place through college. 165 would purchase school.

256 on movies or whatnot, as I don’t possess cable TV and the allure of the movie theater wore off once I had been no longer a teen. 7.99 on Netflix. Or are they counting restaurant spending in this category? 639 would be an incredible number for some folks. A month 400, in pre-tax and after-tax cost savings.