How are other Americans spending their money? The average American household spends 26 percent of earning on housing costs. This 26 percent includes mortgage or rent, utilities, household supplies such as laundry and cleaning, postage and home furnishings. Thirteen percent is spent on transportation, which includes vehicle payments and insurance, gasoline, vehicle repair and maintenance, and public transportation. How does your household spending compare to the national average.
Before you go on a spending makeover, compare what you spend in a month to the national average. Until you know what you spend, and where your money is going, it will be difficult to know where to cut back.
To figure your percentage of spending, use your bank statement or check book to add up what you spend each month. Organize the spending into the broad categories used by the BLS (bureau of labor and statistics). Then compare where your spending stands.
Broad categories for American spending:
- Housing (26.38%): Utilities, household maintenance, postage, home décor, etc.
- Transportation (13.02%): gasoline, public transportation, vehicle payments, vehicle insurance, car washes, auto repair, etc.
- Food (10.14%): food costs for the home and for eating away from home. Include coffee, soft drink and snack purchases.
- Health care (5.20%): insurance premiums, co pays, over the counter medications.
- Insurance and pensions (8.52%): includes life insurance and 401K and pension contributions.
- Entertainment (4.04%): includes pet and toy expense, admissions and game costs, iTunes, cds and DVDs, books, etc.
- Apparel/services (2.73%): Clothing, footwear, hair services.
- Cash contributions (2.70%): includes payments for support of college students, alimony and child support, and giving to charities and religious organizations.
- All Other (5.31%): Alcohol, cigarettes, any expense that does not fit in another category.
After you realize how much you are spending, you can make wise decisions. You may need to cut back on eating out and entertainment, and look for smarter deals on utilities, vehicle insurance, and apparel. You cannot start saving until you understand what you are spending.