Does yours look like?
- Americans spend an average of $5,111 a month.
- Housing is the largest expense of the typical American.
Have you ever wondered how your spending compares to other people’s? It’s natural to be curious about other people’s finances. And knowing how your expenses stack up could tell you if any changes are warranted. With that in mind, here’s how Americans spend their money these days, according to new data.
1. Home: $1,784
The average American spends $1,784 on housing, but that total includes expenses like utilities and maintenance. Now, housing may actually be your biggest monthly expense, and since it’s easy to tie your quality of life to the house you live in, it may be worth spending a little more on the roof over your head. As a general rule of thumb, your housing costs really shouldn’t exceed 30% of your take-home pay. If you’re past that point, you may want to consider moving or downsizing.
2. Transportation: $819
Transportation is the largest expense for the typical American after housing. The $819 the average person spends includes not only car loan payments, but also car insurance, maintenance, and gas. And given that gas prices are up these days, it wouldn’t be surprising to see that number rise.
3. Personal insurance and pensions: $604
Purchasing life insurance is an important step in protecting your loved ones. In a way, it’s good to see that the average American spends a fair amount of money on insurance (as a point of clarity, auto and property insurance don’t fall into this category). That said, within this category, only a small portion usually goes to insurance. The rest goes to retirement plan contributions and Social Security contributions, which are inescapable.
4. Medical care: $431
Even Americans with insurance spend a lot of money on health care. For one thing, many people pay a portion, if not all, of their insurance premiums. Add in deductibles, copays, and medical supplies, and it’s easy to see why health care is such a big expense.
5. Groceries: $412
Food costs have risen these days thanks to inflation. Unsurprisingly, groceries take up a large portion of a typical person’s income. But it makes more sense to spend more on groceries than on restaurant meals. As fun as dining out can be, you’ll get much more value for your money when you shop for groceries and cook meals yourself.
6. Entertainment: $243
We all deserve to enjoy life between work. The typical American spends $243 a month on entertainment, and that’s a totally acceptable sum to spend if you’re covering your essential bills and not draining your credit cards in the process. But if you’re having a hard time making ends meet, you may need to temporarily cut back on entertainment.
7. Restaurants and prepared meals: $198
The typical American spends nearly $200 a month on restaurants and meals out. If you recently switched from working remotely to doing your work in an office, you may see your spending in this category increase. But be warned: restaurants and eating establishments charge notorious price premiums, so if money is tight, you may want to consider preparing more of your own food.
Americans spend most of their money on these seven expenses, and their habits may or may not be comparable. But while knowing what the typical consumer spends may help satisfy your curiosity, remember that at the end of the day, the amount the average person may spend on housing, transportation, or other bills may not be the same as you can afford. Instead of looking at averages, make sure your current budget works for you.
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