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How Americans Make and Spend Their Money, by Education Level

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Months ago, we showed you a set of data visualizations that highlighted how people make and spend their money based on income groups.

Today’s post follows a similar theme, and it visualizes differences based on education levels.

Below, we’ll tackle the breakdowns of several educational groupings, ranging from high school dropouts to those in the highest education bracket, which is defined as having achieved a master’s, professional, or doctorate degree.

Income and Spending, by Education

The data visualizations in today’s post come to us from Engaging Data and they use Sankey diagrams to display data from the Bureau of Labor Statistics (BLS) that shows income and expenditure differences between varying levels of education in America.

The four charts below will show data from the following categories:

  1. Less than high school graduate
  2. High school graduate
  3. Bachelor’s degree
  4. Master’s, professional, or doctorate degree
    1. It should be noted that the educational level listed pertains to the person the BLS defines as the primary household member. Further, people in households can be at different ages and at different stages in their career – for example, someone with a Master’s degree could be 72 years old and collecting pension payments, and this impacts the data.

      Less than High School Graduate – $28,245 in spending (98.5% of total income)

      These contain an average of 2.2 people (0.7 income earners, 0.6 children, and 0.5 seniors)
      Less than High School Graduate

      The average household in this category brings in $17,979 of salary income, as well as an additional $7,503 from social security programs.

      Almost all money (98.5%) is spent, and on average these households are actually pulling money from savings (or taking out loans) to make ends meet. The biggest expenditure categories include: housing (23.5%), foot at home (12.3%), household expenses (8.4%), and gas/insurance (8.2%).

      High School Graduate – $35,036 in spending (87.3% of total income)

      These contain an average of 2.3 people (1.0 income earners, 0.6 children, and 0.4 seniors)
      High School Graduate

      The average household here brings in $29,330 of salary, as well as $9,008 from social security.

      These households spend 87.3% of their income, while putting $3,113 (7.8%) away in savings each year. The biggest expenditure categories include housing (21.7% of spending), food at home (10.1%), gas/insurance (10.0%), and vehicles (7.7%).

      Bachelor’s Degree – $63,373 in spending (68.6% of total income)

      These contain an average of 2.5 people (1.5 income earners, 0.6 children, and 0.4 seniors)
      Bachelor's Degree

      Households with at least one person with a Bachelor’s degree earn $81,629 per year in salary, as well as nearly $11,000 stemming from a combination of social security, dividends, property, and other income.

      Roughly 68.6% of income is spent, with 16.6% going to savings. Top expenditures include housing (22.4%), gas/insurance (8.8%), household expenses (7.9%), and food at home (7.6%).

      Graduate Degree – $83,593 in spending (62.9% of total income)

      These contain an average of 2.6 people (1.5 income earners, 0.6 children, and 0.4 seniors)
      Graduate Degree

      Finally, in the most educated category available, the average amount of salary coming into households is $116,018, with roughly an additional $17,000 coming in from other sources such as social security, dividends, property, and other income.

      Here, 62.9% of income gets spent, and 17.3% gets put towards savings. The most significant expenditure categories are housing (23.3%), household expenses (8.4%), gas and insurance (7.2%), and food at home (6.9%).

      A Changing Role for Education?

      For now, there is a clear link between certain types of college degrees and higher salaries.

      However, as total student debt continues to hit record highs of $1.5 trillion and as more remote educational options proliferate online, it will be interesting to see how these charts are impacted in the coming years.

      By the year 2030, do you think education will still have the same strength of correlation with income levels?

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Mapped: The World’s Biggest Private Tax Havens

What countries or territories do the ultra-wealthy use as tax havens?

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Biggest Tax Havens Share

The World’s Biggest Private Tax Havens

When the world’s ultra-wealthy look for tax havens to shield income and wealth from their domestic governments, where do they turn?

If you’re putting money in offshore bank accounts in order to save on taxes, there are two main criteria you’re looking for: secrecy and accessibility. Based on pop culture and media reports, you might imagine a secretive bank in Switzerland or a tiny island nation in the Caribbean.

And though there is some truth to that logic, the reality is that the world’s biggest tax havens are spread all over the world. Some of them are small nations as expected, but others are major economic powers that might be surprising.

Here are the world’s top 20 tax havens, as ranked by the 2020 Financial Secrecy Index (FSI) by the English NGO Tax Justice Network.

Which Countries are the Biggest Tax Havens?

The FSI ranks countries and territories from all over the world on two criteria: secrecy and scale.

  • Secrecy Score: How well the jurisdiction’s banking system can hide money. This includes analysis of ownership registration, legal entity transparency, tax and financial regulations, and cooperation with international standards.
  • Global Scale Weight: What is the jurisdiction’s share of the world’s total cross-border financial services? This metric is based primarily on the IMF’s Balance of Payments statistics.

By weighing a country’s ability to hide money by its relative share of offshore financial services, we see the tax havens with the biggest impact on the global economy.

RankJurisdictionRegion
1🇰🇾 Cayman IslandsCaribbean
2🇺🇸 United StatesNorth America
3🇨🇭 SwitzerlandEurope
4🇭🇰 Hong KongEast Asia
5🇸🇬 SingaporeSoutheast Asia
6🇱🇺 LuxembourgEurope
7🇯🇵 JapanEast Asia
8🇳🇱 NetherlandsEurope
9🇻🇬 British Virgin IslandsCaribbean
10🇦🇪 United Arab EmiratesMiddle East
11🇬🇬 GuernseyEurope
12🇬🇧 United KingdomEurope
13🇹🇼 TaiwanEast Asia
14🇩🇪 GermanyEurope
15🇵🇦 PanamaCaribbean
16🇯🇪 JerseyEurope
17🇹🇭 ThailandSoutheast Asia
18🇲🇹 MaltaEurope
19🇨🇦 CanadaNorth America
20🇶🇦 QatarMiddle East

At a glance, the top 20 tax havens are spread out across regions. Just under half of the list is located in Europe, but the rest are spread out across the Americas and Asia.

And the jurisdictions are opposites in many ways. They include financial powerhouses like the U.S., Japan, and the UK as well as smaller nations and territories like the Cayman Islands, Hong Kong, and Luxembourg.

But one surprising thing many of them have in common is a link to England. In addition to the UK, four of the top 20 tax havens—Cayman Islands, British Virgin Islands, Guernsey, and Jersey—are British Overseas Territories or Crown Dependencies.

Also worth noting is the importance of scale in the rankings. The highest ranking jurisdictions by secrecy score were actually the Maldives, Angola and Algeria, but they represent less than 0.1% of total offshore financial services.

Best Place To Hide Private Vs. Corporate Tax

Some of the listed tax havens might be confusing to nationals of those countries, but that’s where relativity is important. The U.S. and Canada might not be tax havens for American or Canadian nationals, but the ultra-wealthy from East Asia and the Middle East are reported to utilize them due to holes in foreign tax laws. Likewise, the UAE has reportedly become a tax haven for Africa’s ultra-wealthy.

In addition, many of the countries used as tax havens for individual wealth are also utilized by corporations.

The Tax Justice Network’s 2021 assessment of corporate tax havens listed the British Virgin Islands, Cayman Islands, and Bermuda as the top three tax corporate tax havens.

While individuals might create shell companies in tax havens to hide their wealth, corporations are usually directly incorporated in the tax haven in order to defer taxes.

But the tax haven landscape might soon shift. The G7 struck a deal in June 2021 to start taxing multinational corporations based on the revenue generated in each country (instead of where the company is based), as well as setting a global minimum tax of 15%. In total, a group of 130 countries have agreed to the deal, including India, China, the UK, and the Cayman Islands.

As the campaign to bring back deferred taxes ramps up, the question becomes one of response. Will the ultra-wealthy individuals and corporations start to work in tandem with the new rules, or discover new workarounds and tax havens?

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Personal Finance

Charting The Growing Generational Wealth Gap

How large is the wealth gap between Millennials, Gen X, and Baby Boomers? We visualize the growing wealth disparity by generation and age.

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Generational Wealth Shareable

The Growing Generational Wealth Gap

As young generations usher into adulthood, they inevitably begin to accumulate and inherit wealth, a trend that has broadly remained consistent.

But what has changed recently is the rate of accumulation.

In the U.S., household wealth has traditionally seen a relatively even distribution across different age groups. However, over the last 30 years, the U.S. Federal Reserve shows that older generations have been amassing wealth at a far greater rate than their younger cohorts.

As the visual above shows, the older have been getting richer, and the younger have been starting further back than ever before.

By Generation: Baby Boomers Benefit & Millennials Lag

To examine the proportion of wealth each generation holds, it’s important to clearly define each age group. Though personal definitions might differ, the U.S. Federal Reserve uses a clear metric:

GenerationBirth YearsAge (2020)
Silent Generation & Earlier1945 and earlier75+
Baby Boomers1946–196456–74
Generation X1965–198040–55
Millennials1981–199624–39

Relative to younger generations growing up, the Silent Generation and Greatest Generation before them have seen a decreasing share of household wealth over the last 30 years.

However, the numerical levels have been relatively stable. For these combined generations, total wealth has gone from $16 trillion in 1989 to $19 trillion in 2019, with a peak of $27 trillion in 2007. Considering this cohort has understandably shrunk over time—from an estimated 47 million to 23 million in 2019—their individual shares of wealth have actually increased.

Immediately following are the Baby Boomers, who held more than half of U.S. household wealth towards the end of 2020. At $59 trillion, the generation holds more than ten times the amount held by a comparative number of Millennials.

GenerationWealth (2019)Population (2019)Wealth/Person
Silent Generation & Older$18.8 Trillion23.0 Million$817,391
Baby Boomers$59.4 Trillion71.2 Million$834,270
Generation X$28.6 Trillion65.0 Million$440,000
Millennials$5.0 Trillion72.6 Million$68,871

With $29 trillion held in 2019, Generation X has also been gaining in wealth over the last 30 years. It’s good enough for five times the wealth of Millennials, though at just $440k/person, they’ve fallen far behind Baby Boomers in rate of growth.

Finally, trying to catch up to their older cohorts are Millennials, who held the least amount of household wealth ($5 trillion) for the greatest population (73 million) in 2019, an average of just under $69k/person.

For a direct comparison, it took Generation X nine years to climb from their start of 0.4% of household wealth in 1989 to above 5%, while Millennials still haven’t crossed that threshold. But it’s not all doom and gloom for Millennials. Their rate of growth is starting to rise, with the generation’s level of wealth climbing from $3 trillion in 2016 to $5 trillion in 2019.

By Age: A Growing Share for 55+

Though the generational picture is stark, the difference in U.S. household wealth by age makes the picture of shifting wealth even clearer.

Until 2001, the shares of household wealth held by different age groups were relatively stable. People aged 40-54 and 55-69 held around 35% each of household wealth, retirees aged 70+ hovered around 20%, and younger people aged under 40 held around 10%.

Since that time, however, the shift in wealth to older generations is clear. The 70+ age group has seen their share of wealth increase to 26%, while the share held by ages 55-69 has grown from 35% to almost half.

But not all ages are seeing an increasing slice of wealth. The 40-54 age group saw its share drop sharply from 36% to 22% between 2001 and 2016 before starting to recover towards the end of the decade, while the youngest cohort now hover around just 5%.

Breaking down that wealth by components is even more eye-opening. The 39 and under age group holds 37.9% of their assets in real estate, the largest share amongst any age group (and concentrated in the hands of fewer people) while older age groups have their wealth spread out across real estate, equities, and pensions.

Assets Held by Age (Percent of Total, 2020)70+55–6940–54≤39
Real estate21.6%20.5%27.6%37.9%
Consumer durables3.8%3.6%5.2%9.4%
Corporate equities and mutual fund shares24.6%23.1%18.6%8.1%
Pension entitlements16.3%25.0%21.9%21.0%
Private businesses7.9%9.7%12.1%8.1%
Other assets25.8%18.1%14.7%15.5%

But the difference is as much in assets as it is in opportunity. In 1989, Baby Boomers and Generation X under 40 accounted for 13% of household wealth, compared to just 5.9% for Millennials and Generation Z under 40 in 2020.

Will the Tide Turn for Generation Z?

As new and accumulated wealth has been built up in older generations, it’s a matter of time before the pendulum starts to swing the other way.

The Millennials age group are expected to inherit $68 trillion by 2030 from Baby Boomer parents. Of course, that payout isn’t going to be even across the board, with wealthier families retaining the bulk of wealth and the majority of Millennials laden with debt.

And with Generation Z (born 1997-2012) starting to come of age, the uneven playing field is making it hard to begin accumulating wealth in the first place.

Since it is in the best interest of societies to have wealthy generations that can drive economic growth, potential solutions are being examined all over the political sphere. They include different taxation schemes, changing estate laws, and potentially cancelling student debt.

Whatever ends up happening, it’s important to track how the distribution of wealth changes over the coming decade, and begin accumulating your personal wealth as best as you can.

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