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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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Business

The 20 Biggest Bankruptcies in U.S. History

There is always risk in business – but for these 20 companies, which caused the biggest bankruptcies in history, those risks didn’t quite pan out.

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Doing business means taking calculated risks.

Regardless of whether you are opening a lemonade stand or you’re a leading executive at a Fortune 500 company, risk is an inevitable part of the game.

Taking bigger risks can generate proportional rewards – and sometimes, such as for the companies you’ll read about below, the risk-taking backfired to queue up some of the biggest bankruptcies in U.S. history.

Going For Broke

Today’s infographic comes to us from TitleMax, and it highlights the 20 biggest bankruptcies in the country’s history.

Companies below are sorted by total assets at the time of bankruptcy.

The 20 Biggest Bankruptcies in U.S. History

There are times when companies are forced to push in all of their chips to make a game-changing bet. Sometimes this pans out, and sometimes the plan fails miserably.

In other situations, companies were actually unaware they were “all-in”. Instead, the potentially destructive nature of the risk was not even on the radar, only to be later triggered through a global crisis or unanticipated “Black Swan” events.

The Biggest Bankruptcies in the U.S.

Here are the 20 biggest bankruptcies in U.S. history, and what triggered them:

RankCompanyYearAssets at BankruptcyDownfall
#1Lehman Brothers2008$691 billion2008 financial crisis
#2Washington Mutual2008$328 billion2008 financial crisis
#3Worldcom Inc.2002$104 billionAccounting scandal
#4GM2009$82 billionMassive debt
#5CIT Group2009$71 billionCredit crunch
#6Pacific Gas & Electric2019$71 billionWildfires
#7Enron2001$66 billionFraud
#8Conseco2002$61 billionFailed acquisition strategy
#9MF Global2011$41 billionEuropean sovereign bonds
#10Chrysler2009$39 billionMassive debt
#11Thornburg Mortgage2009$37 billionDeclining mortgage values
#12Pacific Gas & Electric2001$36 billionDrought
#13Texaco1987$35 billionContract dispute
#14FCOA1988$34 billionSavings and loan crisis
#15Refco2005$33 billionAccounting fraud
#16IndyMac Bancorp2008$33 billionMortgage market collapse
#17Global Crossing2002$30 billionPlummeting world economy
#18Bank of New England1991$30 billionBad loans
#19General Growth Properties2009$30 billionFailed acquisition strategy
#20Lyondell Chemical2009$27 billionDecline in demand

The data set on the biggest bankruptcies is organized by assets at time of bankruptcy. Therefore, they are not in inflation-adjusted terms, meaning the list skews towards more recent events.

This makes the impact of the 2008 financial crisis particularly easy to spot.

The events and consequences relating to the crisis (loan defaults, illiquidity, and declining asset values) were enough to take down banks like Lehman Brothers and WaMu. The after effects – including a slumping global economy – led to a second wave of bankruptcies for companies such as GM and Chrysler.

In total, nine of the 20 biggest bankruptcies on the list occurred in the 2008-2009 span.

A Dubious Distinction

You may also notice that one company was on the list twice, and this was not an accident.

Pacific Gas & Electric, a California company that is the nation’s largest utility provider, has the dubious distinction of going bankrupt twice in the last 20 years. The first time, in 2001, resulted from a drought that limited hydro electricity generation, forcing the company to import electricity from outside sources at exorbitant prices.

The more recent instance happened earlier this year. Facing tens of billions of dollars in liabilities from raging wildfires in California, the utility filed for Chapter 11 protection yet another time.

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Markets

Animation: The Basics of the Stock Market

This video highlights the basics of the stock market, how they work, and also the history of how the first markets got started.

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Since its inception, the stock market has been one of the most powerful and consistent sources of wealth creation available.

Although stocks see more volatility than other assets, they have also averaged a real return of 6.7% per year between 1925 and 2014, compared to just 2.7% for bonds and 0.5% for cash.

And over long periods of time, the extraordinary power of compounding can turn this differential into a wealth generation machine.

But What is a Stock Market?

There is no denying the stock market’s unparalleled ability to create wealth, but that doesn’t mean it’s always an easy sell to newcomers.

For most people, the very mention of the stock market conjures up images of a frantic floor at a busy stock exchange, people in suits yelling “Buy!” or “Sell!”, or even the sensational media coverage that can dominate the news cycle.

Today’s animation provides an easier reference point for potential newcomers – it comes to us from TED-Ed and it highlights the basics of the stock market, as well as how it works.

By understanding the original purpose of the stock market and also its history, we can better understand how the modern market applies to wealth creation.

In a nutshell, it provides a way for investors and companies to share the profit (and risks) of bold new endeavors, such as trying to invent a new cancer cure, discovering natural resource deposits, disrupting old business models, or innovating advanced technologies.

The stock market has allowed companies ranging from Amazon to Starbucks to succeed, and for investors to share in that success.

Basics of the Stock Market

Here are some other key questions that the animation helps to answer about the basics of the stock market:

How does a company get on the market?
A company needs to have an Initial Public Offering (IPO). This is traditionally done through big investment banks that help advise companies on the potential value of their company, and the market for their stock. More recently, companies like Slack and Spotify have IPO’d using a less traditional route.

How does going public help a company grow?
In the right scenario, listing on a stock market gives a company access to more capital. With more money, the company can make investments into new products and markets.

How is a stock price determined by the market?
By allowing millions of people to buy and sell shares of the company using the same set of information, it creates transparency and liquidity. Over time, this pushing and pulling creates a “fair” price for the stock.

What else influences stock prices?
Stock prices are not only influenced by what a company does – they are also influenced by external factors such as government regulations, market forces, competition, and changes in technology. Investor sentiment also plays a role.

Why invest for the long term?
Because short-term noise in the market can be hard to predict, most professionals promote long-term, reliable investment methods.

Some examples of this in practice would include low-cost index funds, mutual funds, or simply building your own diverse portfolio of stocks, bonds, and other investments for the long haul.

Past and Future

The stock market is very different today than it was when the first shares of the Dutch East India Company started trading in the 17th century.

Although the financial industry has increased in sophistication since those times, it still has the same general purpose – and it’s easier to get started investing than ever before.

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