BOSTON (TheStreet) -- One might assume that the cost of living would impact saving patterns. Scraping by in an expensive city like New York or San Francisco would surely mean having less money for retirement plans and investments compared to less expensive locales like Plano, Texas, or Tucson, Ariz.
But that may not be the case, according to a recent study of national spending patterns by the new personal finance Web site
. Janet Paskin, Bundle's managing editor, uses the phrase "personal inflation" to explain the phenomena.
"Even in places where you may have a lower cost of living, people spend the money they have," she says. "So
in a more affordable place doesn't necessarily mean you are saving more money. It probably means you are spending more money. I think you can live cheaper in some of these places."
Bundle's research excludes data on rent and mortgages, an omission that provides insight. Sink all your cash in an overpriced city apartment and you would likely spend less as a consumer than people in more affordable suburbs. High rent can reduce you to snacking on Ramen noodles, but lower out-of-pocket expenses can mean more splurging than saving.
"We always hear about Carrie Bradshaw-types spending big in New York City, but when you remove housing costs from the equation, it's not just the stereotypical cities where residents spend big on items like shopping, dining out, groceries or travel," Paskin says. "Austin tops New York City in shopping, and Bakersfield, Calif., spends more than San Francisco on health care and pets. Our behavior as spenders in America doesn't change, but we do spend our money in very different ways."
Bundle, an online community that compares regional and demographic spending, is supported by partners that include
How America Spends
study included U.S. government spending data and third-party research.
In 2009, the average American spent $8,668 on shopping, $6,514 on food and drink, $8,026 on health and family, $5,477 on transportation, $2,699 on travel and leisure, and $6,398 on home expenses (not including mortgage and rent), according to Bundle. The average household expenses of Austin residents, the top spenders, were $67,076, 77% higher than the national average of $37,782. Detroit was the lowest spending city, where residents, hit hard by the recession, spent $16,446 on average.
Among the top-spending cities, few would qualify as a major metropolis:
- Scottsdale, Ariz. -- $64,687
- San Jose, Calif. -- $59,022
- Arlington, Va. -- $52,085
- Plano, Texas -- $56,738
- Raleigh, N.C. -- $53,398
- Nashville -- $52,964
- Tucson, Ariz. -- $51,857
- Irvine, Calif. -- $51,286
- Durham, N.C. -- $51,114
Bundle's research found that consumer spending often increased as fixed living expenses dropped, which could explain why savings rates are low in the U.S.
In the 1980s, Americans' savings rate as a percentage of disposable income bounced between 8% and 11%. In the late 1990s, despite a solid economy, the savings rate bottomed at 1% as people spent more and dug deeper in debt.
In February, according to Bureau of Economic Analysis, personal saving as a percent of disposable personal income was 3.1%, down slightly from the previous month and a drop from the 4.1% average of the previous year. Retail sales increased 0.3% from January, according to the Commerce Department. Notably, sales of home furnishings stores increased 0.7% and electronics/appliance stores saw sales increase by 3.7%. Food and beverage sales increased 1.3%. Because disposable personal income increased by a mere 0.1%, consumer spending appears to be rebounding at the expense of the savings rate.
-- Reported by Joe Mont in Boston.