- Photo Illustration by Terra Molengraff
By Lucy Perkins, Daily Arts Writer
Published November 12, 2012
A floor-to-ceiling American flag constructed entirely of red, white and blue beer cans in the window of an apartment on South Forest Avenue gives passersby a visual representation of how much money its occupants have spent on alcohol.
How much money do you generally spend a week?
At Urban Outfitters, the cash register rings up the multicolored purchases of a thin, long-haired beauty: $249.41.
A less eye-catching college expense sits on a shelf in the pantry of a house: marijuana. While most housemates tend to split the monthly bill when it comes to heat, electricity and Internet, these six housemates incorporate weed into their monthly bill, buying anywhere between $40 and $80 worth of marijuana every month for the house’s enjoyment.
According to the Bureau of Labor Statistics Consumer Expenditure Survey, a survey that provides information on consumers' spending habits, people in their 20s spend a disproportionate amount of their income on food and alcohol. College-aged students spend just over 7 percent of their income on eating out and 1.5 percent of their income on alcohol. In comparison, people aged 45 to 54 spend 3.8 percent of their income on eating out and .6 percent of their income on alcohol, according to the survey.
College acts as a time to put aside adult concerns. For those of us who grew up in the middle class, our parents will give us money if we need help, whether that be in the form of rent, utilities, cell phone bills, transportation or groceries. And because we're still dependent on our parents financially, our bank accounts are rarely empty.
According to Rackham student Jia Tolentino, a writer for the finance website The Billfold, in these four years of our undergraduate studies, we’re able to almost exclusively devote our time to doing well in school and having fun.
“But though that should be treasured, it is a pre-adult bubble without real-world responsibilities,” Tolentino said.
At some point, that bubble will pop. We’ll no longer be insulated by scholarships and constant parental support.
The question is: How will that influence our spending habits? How do we limit ourselves, and where do we splurge? After college is over and reality strikes, financial independence kicks in. Even if we make less money than our parents do, will we shift our responsibilities in the way we spend?
We need to eat, right?
On a Tuesday night at Chipotle, Engineering freshman Lindsay Podsiadlik focused on a steaming burrito at a table, calculating her next bite with precision.
“The only reason I’m eating out today is because it’s convenient,” she said.
Podsiadlik doesn’t usually eat out during the week, but that night, meetings and classes made her too busy to stand in line at the North Quad Dining Hall. She also eats at Buffalo Wild Wings with friends every Thursday as a fun weekly ritual.
Podsiadlik said the money she uses when she goes out to eat comes from her summer job, and she’s careful about how she spends it.
Last month, I asked four students to tell me how they spent their money every day for a week. As they reported their daily damage, the same trends occurred: most of the money was spent on food. The two seniors ate out four times a week because of convenience, not having the luxury of a meal plan. And though the two freshmen didn’t eat out as often because they lived in the residence halls, on the weekends they would spend between $15 and $20 on food. Less often, but more money per meal.
Engineering freshman Gregorio Lopez depends almost entirely on scholarships, so most of his tuition and room and board is paid for. LSA junior Zach Weber said most of his money came from a trust fund his parents set up when he was born, so his tuition is also taken care of. The only expense that these students were responsible for was what they ate from day to day.
My situation is similar, in that the bank account I use to pay for rent, tuition and food is partially supported by my parents. Though I’ve had a job since I was 14 and I saved most of my income for college, my parents cover what my savings and current income don't.
Like the four students I interviewed, I also spend the majority of my money on edibles: groceries, a lot of coffee, alcohol and going out to eat with friends. On average, I spend about $70 a week: $40 on groceries, $20 on coffee and $10 when I go out to eat with friends.
For me, food is easy to justify as a necessary cost because when I’m busy and don’t have time to cook, I still need to eat.
But the problem with monitoring my own spending comes from the fact that my debit cards draw from a pool of money that isn’t entirely my own. If I am tight on money, my parents will help me out.
For instance, I bought coffee four out of five weekdays the first week of November, which equaled the amount I spent on food when I ate out. Though I treated myself more often than I should have, I justified the cost by saying that this week sucked. But if I were responsible for all of the costs associated with being financially independent — that is, monthly rent and utilities, cell phone bills, loan repayments, car insurance, gas and food — I wonder whether I would have made the same financial decisions as I did.
The Middle Class Snack Kid
Some of the smallest things we buy end up costing us more money than we anticipate.
Bert’s Cafe in the UGLi processes more than 2,000 transactions each day, which includes 250 cups of coffee and 130 sandwiches. We, as students, give Bert’s a weekly revenue of more than $21,000 a week — on coffee and bagels and sandwiches.
Beanster’s locations in Pierpont Commons and the Michigan League each rake in between $5,500 and $8,000 per week.
Try to think of how you spent your last $100. It goes away quickly. Over the last few weeks, I spent my last hundred dollars on a ticket to the IASA show, some groceries, a dinner out and gas.
It’s easy to rationalize what we buy, excusing purchases with phrases like, “Well, I need to eat” or, as Podsiadlik said, she just didn’t have enough time.
When I have free time, any social activity usually involves money, too — the bars, restaurants, movies. It’s unavoidable.
In an article in The Billfold, Lindsay Katai called this type of thinking the “Middle Class Snack Kid” mentality.
“‘Middle Class Snack Kid’ is a term I made up for people who do not spend a lot on themselves on the whole, but are running themselves into the ground buying food and drink,” Katai wrote. “As a friend once put it, I am D.T.H. — Down to Hang. And for me, hanging means snacking.”
Lamenting her undying love for snack food, Katai admitted that the reason she was living paycheck to paycheck was because she was spending all her money on Kettle Chips and packaged cookies.
As a child who grew up in the middle class, Katai always had a fresh supply of Goldfish crackers and nachos available every afternoon after she got home from school. Now an adult, Katai still treats herself to snacks on a regular basis despite not having the same income or financial acumen that her parents had.
“I was raised middle class, but I did not graduate into that stratum. What I graduated into was a world where I have a drama degree in a recession, and that translates firmly into the lower class,” she wrote. “I buy myself snacks and drinks and dinners in restaurants because it is a way of pretending that everything is okay. I know I should be saving this money, but the deprivation in all the other ways … freaks me out and makes me sad.”
Katai experimented with her own spending and realized that when she monitored her purchases of food and drink at restaurants or at the grocery store, she saved $130 a month, which is an impressively lower figure from her average $360 per month food expense.
For Katai — and for many Americans, she predicts — snacking is a huge income suck, and is often a way for us to pretend that we can still spend money even if our incomes don’t exactly allow it.
Little things like crackers and smoothies don’t seem like they are going to impact our incomes that much. But then we buy too many of them and look at our credit card statements.
Less money, more problems
What some students who have help from their parents or scholarships don’t realize, Tolentino said, is that money is not an infinite flow.
“If you’re the type of person who has your parents’ credit card and you use it occasionally for birthday dinners or a pair of winter boots, that’s one thing,” Tolentino said. “But then there’s the person with their parents’ credit card who sits online and shops all day.”
The ideal vision is that after we graduate, we will instantaneously become real people, get our acts together and be responsible with our finances. We will cook more, eat out less and open retirement accounts.
But Mike Dang, cofounder of The Billfold, said that’s not what happens. For the first few years post graduation, Dang said people tend to live lifestyles as if we had the same financial aid and parental support as we did in college.
“(College students) instantly want to feel like adults,” he said. “A lot of that has to do with going out and meeting friends for dinner and drinks and talking about jobs even if they can’t necessarily afford it.”
According to information provided by the University's Career Center, 79.3 percent of LSA students who graduated in 2010 found jobs that make below $45,000 a year. A large majority of them head to big cities such as New York, Chicago and Washington, D.C., where the cost of living is significantly higher than that in Ann Arbor.
And keeping up with a similar lifestyle as we did in college, according to Dang, is just not financially viable. The Internet is filled with tales of twentysomethings defaulting on student loans or filing for bankruptcy after developing a crippling credit score.
“Parents aren’t going to want to subsidize their kids for their whole lives,” Dang said. “You just can’t spend money in the same ways. Understanding how debt works is a really important thing.”
Tolentino did note, however, that though graduating can be financially startling for students, the speed at which the real world sets in is much less abrupt than it was a decade ago.
“The transition isn’t as sharp as it used to be,” Tolentino said. “A lot of people have a cushion from their parents and get help now and then.”
Take, for example, writer and actress Lena Dunham (TV’s “Girls”), who lived in her parents’ Tribeca loft until she was 26 after graduating with a liberal arts degree from Oberlin College in Ohio.
“I feel like I'm constantly asking (my parents) to please stay out of my work life but also to please bring me soup,” Dunham said in an NPR interview this year.
Dunham is one of many people in her age group who have opted to move back home with her parents. According to a 2010 New York Times Magazine article, 40 percent of people in their 20s decide to move back temporarily with their mothers and fathers.
Some students aim to live a more upscale life upon graduating. Business junior Alison Dunbar, who is the vice president of the Retail and Luxury Goods Club, said that though she can’t afford to wear all designer clothing as a student, she aspired to wear more of it when she got a job.
“It’s important to wear better quality things and dress appropriately as you get older,” Dunbar said.
She went on to describe herself as “more on the Michael Kors end of luxury goods” than a “Prada girl.”
What is luxury?
As the daughter of an author and an artist, my perspective on luxury comes from within my family: my grandmother.
For the past 40 years, my grandmother has gone to the salon every Wednesday at 10 a.m. to get her hair fluffed and styled and her nails re-manicured. I’ve always felt that this was a luxury. It’s not that I don’t care that my roots have grown out three inches or that I have more split ends than I can count, but unlike my grandma, I just don’t have the money to keep up with it.
But I’ve realized that I do take a lot of the things I spend money on for granted, because being able to go out to dinner every week or buying so much coffee that my heart races for three hours is a luxury in itself, even if it feels necessary or unavoidable.
Dang said habits like mine will need to change if I don’t want to go into debt.
“If it’s easy for you to spend more than you have,” he said. “The only option is to get rid of those temptations.”