How the world spends the money

Romanians allocate less than 1% of the household expenditures for investments, but spend 7% of their income on alcoholic drinks and cigarettes, said Adrian Vasilescu, advisor for strategy with the National Bank of Romania (BNR) this week at a conference in Bucharest.

And even the expenditures for clothing and footwear (5%) were below the average amount spent for cigs and booze in this country.

According to the british magazine ‘Economist’ a country’s spending reflects its national stereotypes (see graphic below). Let’s have a look at the figures provided by the EU’s statistic office ‘eurostat’ how the world is spending their household-income.

Indeed, the Russians even top the Romanians by splashing 8% of their money on alcoholics and cigarettes, while laidback Australians use 10% on recreation and the diligent bookworms – and back-to-back PISA-champions – of South Korea spend more than most other people in the world on education.

In developed countries like the US, Canada, Japan, or the EU, about 20-25% of money is spend on housing, fuel, and utilities. Meanwhile, consumption of food, alcohol and tobacco, and clothing are on the lower ends of the spectrum. In fact, the United States spends the smallest portion on food altogether, at only 6.8%. On the other hand, the (private) health care in the US eats up over 20% of each household’s budget. In the EU, where health care is predominantly a public issue, consumers only spend 4% on it.

With regard to the yearly spending habits in the EU, households spent 3’400 EUR per capita on housing, water, electricity, gas and other fuels.

Together with the next largest components, transport (1’900 EUR) and food and non-alcoholic beverages (1’800 EUR), this already accounted for about 50 % of total expenditure.

The other half of households’ expenditure includes recreation and culture (1’300 EUR) restaurants and hotels (1’200 EUR), furnishings, household equipment and routine maintenance of the house (800 EUR), clothing and footwear (800 EUR as well), health (500 EUR), alcoholic beverages, tobacco and narcotics (500 EUR), communications (500 EUR) education (400 EUR) and goods and services (1’600 EUR) which include expenses for personal care, social protection, insurance and financial services.

Besides this average yearly figures, there are also huge differences between EU member states. Obviously, inhabitants of ‘rich’ countries like the Netherlands spend a lot more on recreation than economically depressed Greeks. And while the people of Malta spend about 20% of their money for restaurant or hotels, this figure in Lithuania is less than 3%.

Well, the massive consume of alcohol and cigarettes in Romania may have a positive effect in the very short term (not for you, but for your government’s taxes) but besides the dead sure negative health issues later.

I would advise anyone in this country to think about this: why not spend a little less on booze and cigs today – instead spend a little more on investments tomorrow in order to be able to spend a lot more on recreation and real fun – this is possible even without alcohol, just in case – in the future.

Hangover ahead – Romanians spend more on alcohol and cigarettes than on clothes and shoes.

Source: ‘Economist’/Eurostat