Americans don’t tend to go about their own business and stay with each other. Considering the time we spend on social media and the like, it’s clear that many of us have a natural curiosity when it comes to what those around us not only do, but spend. With that in mind, here’s a look at what the budget of an average American household looks like, courtesy of ValuePenguin. Take a look and see how your personal expenses compare.
In 2013, the average American household spent $ 10,080 on shelter. In fact, housing continues to be the biggest monthly expense for most Americans, and in 2013, it accounted for 16% of a typical household budget. And that’s actually not a terrible number.
Generally speaking, it’s best to keep your housing costs at 30% or less of your take-home pay. Given that a typical household earned $ 63,784 in the year this data was collected, even including taxes, that $ 10,080 per year is well below the 30% mark, which means that more and more Americans are finally recognizing how essential it is to keep their housing affordable.
After housing, Americans spend the most money on transportation. In 2013, the typical household lost $ 9,004 traveling. And given that 95% of U.S. households own a vehicle, a large chunk of that expense likely comes down to payments, insurance, and car maintenance. In fact, AAA estimates that it costs an average of $ 8,700 a year to have your own car, so if you have the option of offloading that vehicle in favor of public transport, you’ll save a bundle.
Imagine you live in Washington, DC, which has the highest cost of public transportation in the country. If you were to spend the $ 2,844 per year it takes, on average, to get to Washington DC and subtract it from the $ 8,700 a vehicle could cost, you would have an additional $ 5,856 in your annual budget for work. .
Many Americans hate paying taxes, and for good reason. In 2013, the average household contributed over 12% of their budget to the IRS for a total of $ 7,432. Ouch.
The good news, however, is that there are a number of easy ways to lower your taxes and pocket more of your hard-earned money. Traditional or 401 (k) IRA contributions act as an instant tax deduction, and the more money you put in your retirement account, the more financial security you will have in the future. There are also a number of tax breaks designed specifically for homeowners, so it’s worth educating yourself about what benefits you might be entitled to.
Utilities and housekeeping
It costs money to run a household, to keep the lights on to make sure the floors are clean. In total, Americans spent $ 7,068 in 2013 on things like heat, electricity, water, etc.
Most of these expenses are mostly non-negotiable. Sure, you are better off turning off lights when you’re not using them, but you can’t expect to spend your summers sweating to save money on air conditioning. On the other hand, if there are any household maintenance items that you are currently outsourcing, like trimming the bushes or staining the patio, doing them yourself could save you several hundred dollars a year or more. .
We all need to eat, so it’s no surprise that the average household spent $ 6,602 in 2013 on food. If that number seems high, take into account that restaurant and take-out meals are usually marked up by 300%, which means that every time you pay someone $ 30 to cook your meal, you pay $ 20 off. more than if you prepared it at home. . If you’re looking to cut your food costs, cutting out grocery coupons will help, but eliminating restaurant meals and take out will do a lot more damage.
Social contributions, providence and retirement
Sometimes we all need to spend a little bit of money today to protect ourselves in the future. In 2013, the typical household spent $ 5,528 in Social Security taxes (which, if you are a salaried employee, currently equals 6.2% of your first $ 127,200 in income), plus personal insurance (such as life and disability) and pensions. Of course, given that many companies began phasing out pension plans long before 2013, it’s safe to say that the first two items absorbed most of that $ 5,528.
Debt payments or savings
In 2013, the average household spent $ 5,252 on debt repayment and savings. Now, to be fair, we don’t know exactly how this figure breaks down between the two, but since these categories are grouped together, we can assume that some households spent $ 5,252 (or more) on the debt payment alone, while others have managed to put that $ 5,252 in savings. In the first case, it is a lot of money to spend on debt, even if this figure Is include student loans as opposed to high interest credit card payments.
On the flip side, $ 5,252 is a respectable amount to save when dealing with a salary of $ 63,784. Most working Americans should routinely set aside 10-15% (or more, if possible) of their after-tax income. If we write off the above tax payments and Social Security contributions, we can see that $ 5,252 puts smart savers in that range.
Perhaps the most surprising item on this list is health care, which in 2013 cost the average American household $ 3,631. And that’s a lot less than you might expect. However, when we take a closer look at the data, we see that only 79% of households had health expenses in 2013 to begin with, meaning the rest were probably uninsured.
Today, nearly 12% of Americans do not have health insurance, and given the average cost of an individual unsubsidized plan is $ 4,716 per year, it’s easy to see why. Family plans are even more expensive, costing an average of $ 12,252, in the absence of a subsidy. What all of this tells us is that unlike 2013, healthcare today is likely to cost the typical American family more than 6% of their budget.
While some of these expense categories have more wiggle room than others, if you’re currently overspending in a particular area, it’s worth taking a step back and seeing if you have an opportunity to lower your costs. Although you cannot do anything about Social Security taxes, you can strive to keep your transportation, food, and even accommodation costs to a minimum – and that will give you a degree of flexibility that you will appreciate.