How Much Money Do Rich Americans Spend on Luxuries Compared to Everyone Else?

Money
A woman holds coins in Knutsford, United Kingdom, May 20, 2014. People with varying degrees of wealth spend differently on luxury items. Christopher Furlong/Getty

What do the rich spend their money on? Why, luxury goods, of course: A new study shows the top earners splash out most of their earnings on treating themselves.

Analysis from Deutsche Bank Securities, which looked at spending habits of Americans from 1984 to 2014, showed the wealthiest people in society spent 65% of their income on luxuries and 35% on necessities.

The study also found that luxury items appeal to everyone, rich or poor, as people from all wage brackets spend a significant percentage of their salaries on the finer things in life.

People in the middle-income bracket forked out 50% of their earnings on luxury items and 50% on necessities, while people in the lower-income bracket spent 40% on luxuries and 60% on necessities, Marketwatch reported.

The report, authored by the chief international economist for Deutsche Bank Securities, Torsten Slok, states that luxuries are "goods or services consumed in greater proportions as a person's income increases."

And sales of certain big-ticket items have shot up, with the 2017 Knight Frank Wealth Report showing those at the very highest end of the pay scale are investing their riches in investment-grade wine and classic cars.

Additionally, people's emotions have been found to have an impact on their spending habits, with an April 2017 study featured in the Journal of Consumer Research suggesting some emotional states propel people toward certain types of spending.

"Consumers who experience a loss of control are more likely to buy products that are more functional in nature, such as screwdrivers and dish detergent, because these are typically associated with problem solving, which may enhance people's sense of control," the report said.