How does an individual's income affect his or her spending habits? 

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gsenviro | College Teacher | (Level 1) Educator Emeritus

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In general, the spending habits of an individual are a function of how much money he or she has (something that can be measured as a function of his or her income). The higher the income (or rather disposable income, i.e. the amount of money one can spend), the higher will be an individual's spendings. This is simply because a higher income ensures that the individual has more money to spend. Correspondingly, a fall in income level will force an individual to curb his spending habits. In today's free markets, where credit is readily available, we see many individuals spending most of their income very quickly and then living off credit (while waiting for the next income check). That is why many people work multiple jobs so as to ensure they have enough money for expected spending.

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