Most recommendations I have read about spending seem to vastly over estimate the percentage of income that should be spent on entertainment and hobbies. A recent study of the percentage of income spent by Americans on various categories does show some interesting facts:
The amount of money spent on housing, food and transportation rise dramatically with increased income. Obviously, taxes rise but the greatest increase is in financial payments such as private pension contributions and mortgage principal. People across the board purchase a large number of consumer items, such as microwaves, VCRs, cellphones, computers, color TVs, and air conditioning. Virtually everyone in America now has a telephone, a car, a radio (or six or seven), a refrigerator, a clothes washer and a dryer.
So, looking at these spending habits, how can someone best save money? Unless you fall in the lowest income level, it appears that there is a lot of money needlessly spent on food. Housing is one of the biggest expenses and is likely an area where some could save a lot of money, if they are willing to downsize. Transportation is also an area where significant cuts can be made. It is likely that as income rises people buy more expensive automobiles and spend more money on traveling. Both of these are areas that can be cut without a major adjustment in life style. None of the other areas of consumption including things like entertainment, health care, charitable contributions, education or apparel and services, seem to be areas where increases in income result in extraordinary increases in spending.
It is a fact of life that those who make more money spend more money. To increase savings and to cut expenditures, it is absolutely necessary to know how much is being spent and where. None of the decisions concerning decreased spending can be made without information on which to base decisions.