• Philip Stratton

LESSON 13: The BIG 4 - #4 Clothing+

Updated: May 14

There are numerous studies on how Americans spend their income as a percentage of their pay. A common claim is that households spend approximately 75% of their income in only 4 areas: Housing, Transportation, Food, and Clothing. The following chart which shows spending by category over the 73-year period of 1941-2014 does show how these categories, especially the first three, are far greater than the others. In more recent years, healthcare and entertainment spending has exceeded clothing.



Clothing is the last of the "Big 4" categories. Although this may have been a large spending category in the past, and may still be among the fashion minded, several conditions have changed over the recent years to make clothing more affordable. Manufacturing has mostly moved overseas to areas where labor costs are much lower and there has been a growing trend to purchase previously owned clothing from thrift stores and garage sales, which significantly reduces the cost of clothing. Some people manage their clothing costs by creating a uniform of sorts for themselves, like Steve Jobs and his standard black turtleneck and jeans. Minimalists Matt D'Avella and Joshua Becker have created videos and articles describing their daily wear items. As many people return to an in-person workplace, selecting a few coordinating clothing items that can be mixed to create multiple looks is a money smart approach to a business wardrobe.


As the chart indicates, clothing expenditures as a percentage of income has been surpassed by healthcare costs and recreation/entertainment costs. The growing costs of healthcare is a national concern. While there aren't easy answers, costs can be minimized by utilizing urgent care facilities and telemedicine options instead of an emergency room visit whenever possible. Also, seeing your primary care provider more frequently, not less frequently, might help prevent future chronic issues. This, in turn, could lead to an overall decrease in healthcare expenses.

Recreation/entertainment is an important category. After all, "all work and no play makes Jack a dull boy", right? Once again referencing those within the minimalist community, it is better to put money towards experiences, rather than stuff, since what we've done is often more memorable than things we've purchased. But there are many elements of this category that can have a significant impact on your spending.


Subscriptions - how many subscriptions do you have? A surprisingly large number of people don't remember all the things they had agreed to and just pay the monthly or annual subscription costs. Magazines arrive and immediately go into the recycle bin. Club memberships renew but the club benefits aren't utilized. Fees are paid to have access to discounts on things you no longer wish to purchase or to a service you no longer need (such as a home phone line).


Cellphones - yes, cellphones have simply become a subscription for a lot of people. The lease programs allow you to pay a slightly lower monthly price for a phone over a period of time (usually 2 years) and when given the option to pay the outstanding balance on the 2 year old device or enter a new lease in order to receive a shiny new phone, many simply roll into a new lease since they are already used to paying the monthly amount anyway.


Cellular plans - shopping around can save you a lot of money. This is a competitive market and there are providers in addition to AT&T, Verizon, and T-Mobile hoping to gain your business. Be honest about your needs (do you need unlimited data or would 8GB per month be enough since you are near Wi-Fi most of the day?). Ask about discounts based on your age, student status, military affiliation, employer discounts, etc. Chances are you'll be able to save money if not already receiving a discounted rate.


Television - this no longer means the box in your living room where your family watches ABC/CBS/NBC programming together. Television includes cable service (which can run $150-$200 or more per month!), streaming services (Netflix, Amazon Prime, Disney+, Apple TV+, Hulu, and many more), cable replacement streaming services (YouTube TV, Sling TV, Hulu TV, etc.) which is delivered via an internet connection rather than a coax cable and provides similar programming as your traditional cable service at a lower cost. The options in the is category are almost endless. Your television choices will depend on what content you enjoy the most, the delivery method you prefer, and the ages of your family members. For us, we have a rooftop antenna to receive local over-the-air programming (over 50 channels available in the St Louis area), an Amazon Recast DVR to record OTA programming, and we pay for a handful of streaming services such as Hulu, Amazon Prime, and Disney+ (our T-Mobile phone plan includes a free Netflix account and recently offered a year of Apple TV+ and Paramount+ for free).


Insurance - how often do you shop for quotes on insurance for your home, auto, and recreational toys? With each renewal period? Every couple of years? Every couple of decades? Working with an insurance broker, rather than an agent with a single company, is an excellent way to ensure you are getting the best rates for your insurance needs. My broker routinely reviews our policies as their renewal period approaches and lets me know if a better option is available. This saves me a lot of time, effort, and MONEY!


There are many more things that could be included, but you get the idea. Review your bank and credit card statements and highlight all of the subscription fees that appear. Ask yourself, and your family, whether the subscriptions still offer their intended value. Cancel the ones that no longer are worth the expense. For those that make the cut, consider shopping for a better deal (like cellphone plans) or a cheaper alternative (like cancelling cable in exchange for a streaming cable replacement or a couple streaming services).


In short, take time to seriously analyze your spending and be very intentional about the food, clothing, medical care, and recreation/entertainment choices you make. The time you invest towards reviewing your past choices could pay you dividends towards your future happiness and financial health.

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