According to data from the Bureau of Labor Statistics, the average pretax household income in the United States in 2019 was $82,852, while average household expenditures added up to $63,036. This means the average American spends about 76% of their income. Learn how that number breaks down and how much is allocated to expense categories, such as rent, healthcare, transportation, childcare, clothing, self-care, and even entertainment. Find out how you can save money on some of your big-ticket monthly expenditures.
How Americans Spend Their Money
The data shows that the average American spent $8,169 on food and $20,679 on housing in 2019. The latter accounts for around 25% of the average American’s income. This number is actually well within the appropriate range for housing costs, as many experts say you should spend no more than 30% of your income on this expense. The Bureau of Labor Statistics data also found that:
$1,833 was spent annually on clothes and other related services.$10,742 was spent on transportation, including gas and vehicle purchases.$5,193 was spent annually on healthcare.Entertainment spending averaged $3,050 annually.Education expenses averaged $1,443.Personal insurance and pensions cost $7,165.
Trends in Income and Spending
From 2017 to 2018, the Bureau of Labor Statistics reported an increase in both average annual income and spending, although income increased by more. This trend continued from 2018 to 2019. Year over year, the average income before taxes increased by 5.4%, while spending increased by just 3%. The most notable changes in spending from 2017 and 2018 to 2018 and 2019 were increases in new vehicle purchases (10.5%) and healthcare (4.5%), which were offset somewhat by drops in entertainment (-4.2%) and miscellaneous spending (-6.8%). Education expenses increased slightly (2.6%) after falling the previous year.
Evaluating Your Own Spending
These averages aren’t meant as exact targets for you, but it can be helpful to have a benchmark to evaluate your current spending. If you see a specific category where you’re spending noticeably more than the average, that might be a good place to start for a deeper look. Here are some examples of adjustments you might make in a few common areas of overspending:
The Bottom Line
If you feel like you’ve been overspending every month with no idea why, these averages can be a helpful starting point to see where you stand and what might be going wrong. These numbers change every year as the consumer price index shifts and consumer behaviors change, so make a habit of checking in every so often so you can make adjustments to your own budget.
