How Consumers Budget

60 Pages Posted: 24 Jan 2021

See all articles by C. Yiwei Zhang

C. Yiwei Zhang

University of Wisconsin-Madison

Abigail B. Sussman

University of Chicago - Booth School of Business

Nathan Wang-Ly

Commonwealth Bank of Australia; University of New South Wales (UNSW) - School of Psychology

Jennifer Lyu

affiliation not provided to SSRN

Date Written: November 29, 2020

Abstract

Although budgeting is widely considered a common method of managing household finances, surprisingly little is known about the budgeting process. Using a nationally-representative survey (N=3,826) of US adults, we examine budgeting behaviors and beliefs, including who budgets and why, how individuals categorize consumption, and how they adjust their behavior after over- or under-spending. We identify five facts that illuminate key features of budgeting and supplement findings with administrative data (N=194,678) from a large financial institution in Australia. Understanding systematic patterns in how individuals and households budget may serve a critical role in informing economic models of consumption-savings behavior.

Keywords: budgeting, household finance

JEL Classification: D14, D90, G50

Suggested Citation

Zhang, C. Yiwei and Sussman, Abigail B. and Wang-Ly, Nathan and Lyu, Jennifer, How Consumers Budget (November 29, 2020). Available at SSRN: https://ssrn.com/abstract=3739543 or http://dx.doi.org/10.2139/ssrn.3739543

C. Yiwei Zhang (Contact Author)

University of Wisconsin-Madison ( email )

HOME PAGE: http://www.yiwei-zhang.com

Abigail B. Sussman

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Nathan Wang-Ly

Commonwealth Bank of Australia ( email )

Sydney
Australia

University of New South Wales (UNSW) - School of Psychology ( email )

Sydney
Australia

Jennifer Lyu

affiliation not provided to SSRN

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