Do you know how much you spend monthly? If not no worries because not many people do… and if they do, there’s a good chance they’re a pretty big nerd (myself included). However, thanks to the CBO and the Consumer Expenditures (CE) team, we now have a great view of the monthly breakdown of where we spend our money!
Five years ago, I finally finished paying off my debt. The reason: 7 years ago I experienced my breaking point and realized I sucked at managing money. I had acquired over $50,000 of debt and didn’t have much to show for it except a new car and bachelor pad furniture. As a side not, I lost my bachelor pad furniture in the marriage.
It got real for me in 2005 because I began tracking my expenses at an extremely detailed level. It was somewhat excruciating doing it for so long, but it’s what led me to where I am today. After I figured out where my money was going, I started using the cash budget system to control my spending.
Can you tell me your monthly expenses? If not, it might be time to start tracking it. If so, it will be interesting to compare with national averages for spending. Let’s get to the numbers:
As I’ve mentioned in the past, the average salary in the US Census Bureau’s survey is $60,753, which is quite a bit higher than the national average of $49,445. You should use this knowledge to scale the ‘average monthly’ category up or down based on your salary. One of the most interesting parts of the survey is that average income has increased by almost 50% in the last ten years. I know many people haven’t seen this in their own lives, but someone is seeing it!
The average family (2.5 people) in the US spends $4,089 a month on expenses. Not surprisingly, the largest category for monthly expenses is housing (34% of total). The “Housing” category includes mortgage/rent, utilities, cleaning goods, furniture, and decorations. It also includes “Telephone services” which I assume contains cell phone expenses; which totaled $97 per month.
The second highest expense category is “Transportation” with the third highest as “Food”. Does this seem backwards to anyone else? As I’ve mentioned previously, I think new cars suck if you can’t afford them, and you should try to spend no more than 20% of your salary on a new car.
The other important part of the data is the ten year change (from 1999 to 2009). Not surprisingly, the two fastest growing expense categories are Healthcare (60%) and Education (68%). Within healthcare, “Health insurance” grew by 94%!
The other largest detailed category expense increases were “Pets, toys, and playground equipment” at 99%, “Heating fuel” at 91%, “Gasoline and motor oil” at 88%, and “Other household expenses” at 81%. At least the fastest growing category is one we have fun with – pets!
Some monthly expense categories actually dropped the last ten years! These include “Reading” at -30%, “New/Used cars” at -20%, and “Life and other personal insurance” at -22%. I thought the 30% drop in the “Reading” category was pretty interesting because it can be pretty directly attributable to the increased information available on the internet. Hopefully, we aren’t just reading that much less!
This is fun data to comb through and summarize, but it’s not going to be helpful to you unless you use it to take action. How does your monthly spending care to the average? Are there items you’ve learned to cut down on?