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Savings & Spending Tips Spending Habits Once you've determined how you spend your money, take some time to study each category. Re-evaluate your spending habits and pay particular attention to the areas that surprised you. Be sure to ask yourself these key questions before spending: Key Questions Is this product or service essential? Could I get by with a less sophisticated, less expensive version of the product? Am I using more of the product or service than I really need? Am I buying at a competitive price? Am I spending too much money relative to my income level? How can I save more? Am I jeopardizing my future with my current spending habits? Complete the Financial Overview Quick Report for answers. How do you spend your money compared with the average American? Take a look at the pie chart. When you count all taxes -- federal, state, sales, property and excise -- the average American pays 32% of their income to taxes. The next highest is house and household at almost 17%. Notice the sliver that represents our savings. It's currently at .4%. Analyzing your cash flow statement is critical to understanding and improving your spending habits. You may see expenses that surprise you — areas where you are spending more than you thought. You may identify several categories where you can spend less, and increase what you pay into savings and investments. Now let's look at ways to save! Source: Tax Foundation, 2002 < PREVIOUS NEXT > #40044