What is disposable income? It is the amount of money that households have available for spending, saving and investing after income taxes and mandatory payments (i.e. mortgage, food, transportation and health insurance) are accounted for.
A recent survey initiated by Money Magazine disclosed that the disposable income of American households is disbursed as follows:
Travel: 30%
Home and Beauty: 22%
Eating Out: 20%
Clothing: 17%
Recreation: 11%
Did you notice anything missing? Yes, you got it! Based on this survey most American households apparently aren't using any of their disposable income to put towards savings or investments. We can not expect our finances to grow if there is no system of saving and investing.
This is a huge problem that will result in Americans having to work far longer than their parents and grandparents had to. Let's get in front of this and begin developing a plan to save and invest.