Consumer Expenditures by Age

Video Transcript 

My name is Robert Bonavito, New Jersey Forensic Accountant. This video is part of a series of videos where I discuss forensic accounting topics for educational purposes only.

In many divorce matters, we're asked to do lifestyle analysis. And what most people don't realize is that there's a natural rhythm to your spending that everybody in this country has and the rhythm is basically proven by consumer expenditures by age.

This natural rhythm, it goes something like this. When you're young, of course, you have a lot of disposable income because you're usually living with your parents. Once you go to college, you have no income but you don't need any income. And then when you graduate and get married, things start to change a little bit. You're actually spending more than you're earning in your 20s and 30s because you're buying houses, you get married, and furniture, and stuff like that. And then during your 30s, there's kind of a breakeven period where your expenses start to equal your income, hopefully. And in the 40s, it, again, changes. You know, if you have kids, then they're going to college, you may be spending more than you're making.

But in the 50s are a key period. And unfortunately, you have a lot of divorces in the 50s. In the 50s is when your income is up and your expenses are usually going down because the mortgage may be paid for, the kids are out of school, you don't need a car, you're not traveling as much. And this is when most people are accumulating most of their assets in their late 40s and 50s. And the 60s, too, some people will continue that trend. But once they hit 70 and 80, it reverses and this natural rhythm changes, of course, where you're spending more than you're earning. And again, that will change a little bit later. Sometimes, the expenses will go down a lot. But, basically, you're living off all the money that you've earned in your 40s and 50s.

And this natural rhythm is important because if we're doing a lifestyle analysis, I'll go in there expecting to see certain things depending on the family structure. How old are the kids? How old are parents? Are they working? What's the situation at home? And if that doesn't match up with what I see in the bank or investment accounts, we're gonna have to do further investigation.

So anyway, just keep in mind that there is a rhythm to your spending. See how old you are and how you much money you're spending, and see where you are on that natural rhythm that we all, you know, have to deal with.

If you have any questions on this, feel free to give me an email.