The monthly costs for many Americans to maintain a roof over their heads, food on the table, and transportation can be rather high. Education, child care, health care, retirement savings, and entertainment are expenses frequently included in household budgets.
Consumers today have less money in their budgets for savings and debt repayment due to rising prices for goods and services, which are at a 40-year high. According to the most current Consumer Expenditure Survey, American spending was 9.1% more of their income in 2021 than in 2020. The U.S. Bureau of Labor Statistics (BLS) report includes a list of typical spending levels for various categories.
You may assess how it stacks up by comparing your budget to the typical American household budget.
Budget statistics for households
According to the BLS study, the average household earned $87,432 in 2021 before taxes and spent $66,928. The costs of accommodation, transit, and food were substantial. In 2021, expenses for living consumed a little over three-quarters of the average person’s income.
Income and expenditure statistics for households in 2021
| Household Earnings | $87,431 |
| Total Household Spending | $66,928 |
| Housing Spending | $22,624 |
| Transportation Spending | $10,691 |
| Food Spending | $8,289 |
| Increase In Household Spending From 2020 | 9.1% |
| Percent Of People’s Income Devoted To Living Expenses | 76.5% |
| Area Of Largest Expenditure Increase Entertainment | 22.7% |
The average American household spends
The BLS poll found that the biggest outlays were for housing and transportation, which accounted for 26% and 13% of people’s take-home pay, respectively. Food was another significant expenditure area, accounting for 10% of total spending.
In a survey conducted by Debt.com in 2021, eight out of ten Americans said they budgeted their money, a 12 percentage-point rise over 2019. The vast majority of those who budgeted indicated they used the money to pay off debt or prevent getting into it.
Cost Of Living
taxes
According to the BLS study, the typical pre-tax income for each household in 2021 was $87,432. Compared to solo filers, head-of-household filers, and married couples filing separately with that income from 2018 to 2021, married households filing jointly with that income were in a lower tax bracket. However, for that income in 2022, people with all four filing statuses will be in the same bracket.
Retirement
According to Northwestern Mutual’s Planning & Progress Study, the average amount people had saved for retirement in 2021 was $98,800, up from $87,500 the year before. Accordingly, from 2020 to 2021, Americans saved an average of $11,300 for retirement.
Age-related differences in average retirement savings are shown in data from the Federal Reserve Survey of Consumer Finances:
| 35 and Younger | $30,170 |
| 45-54 | $131,950 |
| 55-64 | $408,420 |
| 65-74 | $426,070 |
| 75 and Older | $357,920 |
Average Household Spending
Utility Cost
The typical monthly American spending for electricity, natural gas, water, garbage removal, and sewage is $315. This equates to $3,780 each year.
Depending on the season, several utilities’ costs can change. For instance, during the months when they put on the heat, people’s natural gas expenditures are frequently greater, whereas their electricity bill is higher during the summer. Utility costs frequently differ by state and climate.
Fixing leaking faucets and ensuring that unused lights are turned off are two ways to save utility costs. You can save money during the cooler months by turning down the heat when no one is home or wearing additional layers.
Food
Most household budgets dedicate a substantial amount of money to food. According to the BLS poll, food was Americans’ third-largest spending category in 2021, and it has been increasing more expensive due to inflation. The cost of food consumed at home has increased significantly over the past year, by 13.5 percent.
According to the BLS, the following foods saw the most price increases over 12 months ending in August 2022:
- Eggs: 39.8 percent
- Flour: 23.3 percent
- Milk: 17 percent
- Bread: 16.2 percent
- Non-alcoholic beverages: 13.4 percent
- Fruits and vegetables: 9.4 percent
- Meat, poultry, and fish: 8.8 percent
Making a weekly meal plan and corresponding grocery list, switching out pricey cuts of meat for less expensive ones, purchasing generic goods, and avoiding shopping on an empty stomach are all ways to counteract rising prices and save money on groceries.
Housing
According to the BLS study, overall housing costs climbed by 5.6 percent in 2021 compared to the previous year, with the average household spending $22,624 on housing that year. Property taxes are one of a homeowner’s housing expenses.
According to the real estate information site Agent Advice, the national average property tax on single-family houses increased by 1.8 percent in 2021 compared to 2020.
It listed the following five American cities as having the highest property tax rate hikes between 2020 and 2021:
- Lancaster, Pennsylvania (29.2 percent increase)
- Nashville, Tennessee (27 percent increase)
- Knoxville, Tennessee (22.2 percent increase)
- Chattanooga, Tennessee (22 percent increase)
- Winston-Salem, North Carolina (20.5 percent increase)
Rent has increased along with other housing costs. Rent costs increased to $2,084 on a monthly average in September. According to data, the following metropolitan areas have the least expensive rents:
- Wichita, Kansas
- McAllen, Texas
- Little Rock, Arkansas
The most costly areas to rent are:
- San Jose, California
- New York City
- San Francisco
Asking your landlord if you should anticipate an increase when your lease comes up for renewal is one strategy to help you prepare for potential future rent increases. If the answer is yes, being aware of this beforehand could allow you enough time to look for a new residence if you cannot pay the higher monthly amount.
Budget-affecting expenses
School
Inflation had a big impact on back-to-school buying in 2022; according to a study, 53% of people making between $50,000 and $99,999 a year stated they intended to adjust their back-to-school spending as a result of inflation. Comparatively, 39% of households with incomes of $100,000 or more, and 37% with incomes under $50,000.
According to this same study, parents who wanted to save money for back-to-school intended to use the following tactics:
- More specials, discounts, and coupons (54 percent of respondents)
- Spend less on school supplies (45 percent)
- Buy less expensive brands (43 percent)
- Utilize their current possessions for another year (39 percent)
- Obtain secondhand and used items (30 percent)
According to the National Retail Federation, families with children in elementary school and high school anticipated spending an average of $864 on school supplies in 2022. Compared to 2021, this represents an increase of about $15 per family.
College
The average cost of college tuition for the 2022–2023 academic year is as follows, per data from the College Board:
- Public, in-state, four-year university: $10,950 (an increase of 1.8 percent over 2021-22)
- Public, out-of-state, four-year university: $28,240 (an increase of 2.2 percent over 2021-22)
- Public, in-district, two-year college: $3,860 (an increase of 1.6 percent over 2021-22)
- Private, four-year, nonprofit university: $39,400 (an increase of 3.5% over 2021-22).
According to EducationData.org, the price of living, whether on campus or in an off-campus residence, ranges from $10,941 to $12,857. The price varies depending on the school’s 2-year or 4-year length, whether for-profit or nonprofit, and if the student attends a public or private university.
According to Saving for College, which categorized the typical sum saved by families according to the kid’s age, the average balance in a 529 college savings account as of June 2020 was $25,664.
- Age 0-6: $7,929
- Age 7-12: $15,359
- Age 13-17: $27,559
- Age 18 and older: $27,778
Costs Of Transportation
The price of owning and maintaining an automobile, which is common in America, consumes a large portion of the typical household budget. The average cost of a new car in June 2022 was $48,301, while the cost of a used car was $28,200.
The continuous costs of owning a car and the hefty purchase price include insurance, maintenance, and gas. According to AAA Gas Prices, the current national average for gas is $3.44 per gallon, and the highest average price ever recorded is $5.02 in June 2022.
The average monthly payment for new cars was $667 in the second quarter of 2023, and 38.2 percent of consumers were financing new cars. The typical monthly payment for used car loans was $515.
Creating A Budget
It may seem difficult to put together a household budget, but it can keep you on track with saving money whether you want to increase your savings, lock in a rate with a CD, or aim for a higher yield with a money market account. It can also help you cut down on unnecessary expenses throughout the year. Making a budget can be as easy as following a few straightforward steps:
According to the 50/30/20 budgeting guideline, your money should be divided into three categories: needs, wants, and savings. Every dollar of your income is allotted to categories in a zero-based budget, including savings.
Worksheets help enter line items for money made and spent, whether written on paper or developed on a computer.
Your regular paycheck can be your only source of income, or you might also have supplementary money from a side business or rental property. Total up all of your earnings after taxes.
Spending categories such as housing, transportation, food, healthcare, entertainment, savings, and debt repayment should all have line items created for them. Include both recurring and variable fixed expenses in your budget.
Make sure to update your budget if your requirements or income change. You can stay on track and achieve your financial objectives by updating your spreadsheet regularly.
