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Lowest-income families spend 40% of their money on what economists label luxuries

Do you need it or want it? Americans of all income levels spend big chunks of their incomes on luxuries.

It turns out that all Americans, regardless of income, spend a large percentage of their income on what economists categorize as luxuries.

People who make the most money spend the biggest chunk of their incomes on luxury goods, but even the poorest households spend a significant amount on luxuries, according to an analysis released recently by Deutsche Bank Research.

The wealthiest families (the top fifth of earners) spend around 65% of their incomes on luxury goods and 35% on necessities, according to the study, which looked at spending habits between 1984 and 2014. Middle-income households weren’t far behind: They spend 50% on luxuries and 50% on necessities.

Even the lowest-income families (the bottom fifth of earners) spend 40% on luxuries and 60% on necessities, according to the study’s author, Torsten Slok, chief international economist for Deutsche Bank Securities.

The median household income...

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