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fool.com - American Households' Average Monthly Expenses - The Motley Fool

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The average monthly expenses for American households are $5,577, according to the most recent Consumer Expenditure Survey from the U.S. Bureau of Labor Statistics (BLS). That spending covers everything from major costs such as mortgage payments and groceries to smaller purchases like apparel and entertainment spending. With inflation spiking throughout 2022, it’s likely that Americans are spending more in major categories like housing, transportation, and food than the BLS numbers -- which measures spending over the course of 2021 -- shows. By peeking into the national average budget for all these categories, we can get a better idea of where people spend the most and how our own spending habits compare.

Key findings The average household's monthly expenses are $5,577 ($66,928 per year).

The average annual income after taxes is $78,743.

Housing is the largest average cost at $1,885 per month, making up 34% of typical spending. Americans spend $691 on food per month, with almost two-thirds being spent on groceries ($438) and the rest on eating out ($253). Transportation costs more than many realize ($913 per month), largely due to the intermittent nature of these expenses.

Healthcare spending averages $454 per month.

Average monthly expenses per household: $5,577 (+9%) The average expenses for a single consumer unit in one month in 2021 were $5,577. Meanwhile, average spending per year came out to $66,928. Keep in mind that the cost of living can vary by region -- some cities are cheaper to live in and others are more expensive. The figures presented in this article are national averages. Average expenses grew 9% from 2020 to 2021, with Americans resuming the trend of spending more each year after expenditures shrunk in 2019. You might be wondering what exactly counts as a consumer unit. BLS defines a consumer unit as any of the following: Families

Single persons living alone

Single persons sharing a household with others but are financially independent

Two or more people living together and sharing major expenses For example, two parents and a child would be one consumer unit. Three roommates would be three consumer units. The average consumer unit is 2.5 people. Average annual household income: $78,743 The average annual household income after taxes in 2021 was $78,743 and $87,432 before taxes, per the BLS. Based on those figures, Americans spend 85% of their after-tax income and have a savings rate of 15%. That’s not too far off the recommended savings rate of 20% While the amount you save is most important, where you put that money also matters. A good option may be a high-yield savings account to maximize the interest you earn. Where Americans spend their money Here's a full breakdown of the average spending by category: A quick note about monthly spending The BLS survey only calculates annual spending, so we divided those numbers by 12 to get the average household expenses per month. Because we rounded to the nearest dollar, there may be small discrepancies when comparing the monthly and annual numbers. It's also worth noting that not all of the typical expenses are monthly expenses. Some of these expenses are intermittent. For example, most people aren't spending $297 per month on entertainment. But over the course of the year, the average is $3,568. Average monthly spending on housing: $1,885 (+34%) Housing is by far the largest expense for Americans. Monthly housing expenses in 2021 average $1,885, a 6% increase from 2020. Spending on housing has likely risen in 2022 as the housing costs continue to stubbornly increase. Of the $1,885 Americans spend on housing each month, $1,105 of it goes towards housing payments. That amount can change significantly depending on location, house size, and whether a person has roommates. Here’s a more detailed breakdown of different expenses of home ownership and how much Americans spend in each category. Average monthly spending on transportation: $913 (+16%) Transportation is the second-largest monthly expenditure, and Americans spent 11% more on transportation in 2021 than they did in 2020. Americans likely spent even more on transportation in 2022 as fuel and vehicles are among the products hardest hit by inflation. Transportation expenses tend to be spread out but add up to be significant. Maintenance and repairs aren’t generally monthly expenses but amounted to $975 on average in 2021. People don’t usually buy a new car every year, but when they do, it’s a major purchase. Depending on the payment schedule you choose, auto insurance could be a monthly expense or one that you pay twice a year.

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Average monthly food spending: $691 (+12%) Food spending includes groceries and food away from home, which is any food that you pay someone else to prepare for you. Average food spending increased 13% from 2020 to 2021. Spending on food away from home increased by 28% from 2020 -- likely due to restaurants reopening and more Americans venturing out to restaurants over the course of 2021. Grocery spending increased by 6% in 2021, in line with the increase seen in 2020. Americans are probably spending more on groceries and food away from home due to inflation. If you've seen your own supermarket spending increase, a grocery credit card could help you save on that. Average monthly personal insurance and pension spending: $656 (+12%) Personal insurance and pensions accounted for $656 in monthly spending in 2021, a 9% increase from 2020. To clarify, this category includes life insurance, personal liability insurance, accident insurance, and disability insurance. It doesn't include homeowners insurance or renters insurance, which are part of housing costs, or auto insurance, which is part of transportation. Just 6% of spending in this category goes toward personal insurance. The remaining 94% goes to pensions and Social Security. That category includes contributions to retirement accounts and the Social Security benefits withheld from your paycheck. Average monthly healthcare spending: $454 (+8%) Average monthly healthcare spending amounted to $454 in 2021, up 5% from 2020. Sixty-eight percent of healthcare spending in 2021 went toward health insurance premiums, which cost an average of $309. By comparison, in 2020 just over 70% of Americans’ healthcare expenditures went toward health insurance premiums and monthly spending amounted to $306. Average monthly spending on entertainment: $297 (+5%) Americans spent 5% of their monthly budgets on entertainment in 2021, adding up to $297 per month. Entertainment spending was up 22% in 2021 compared to 2020 with the largest spending increases occurring in entertainment supplies, equipment, and services, and fees and admissions. BLS made some interesting decisions in what was and wasn't considered entertainment. As entertaining as pets can be, pet owners would probably argue that they deserve their own category. Avid readers may be surprised to learn that reading doesn't fall under entertainment (it has its own category instead). Average monthly spending on apparel and services: $146 (+3%) Apparel spending increased by 22% in 2021 after plummeting 24% from 2019 to 2020, likely due to Americans spending more time in social situations after being less concerned about dressing up during the early days of the pandemic.

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Average monthly expenses by household size Average monthly spending can vary by household size, and data shows that although one-person households spent much less than two-person households in 2021, they had it hardest financially. One-person households were the only household size to spend more over the course of the year than they earned, on average. Average monthly spending by age Americans between 45 and 54 years old spent $6,988 on average per month in 2021, the most out of any age group. Americans aged 35 to 44 years old spent a similar amount, $6,643. Americans under 25 years old spent the least, with their average monthly expenses in 2021 coming out to $3,505. Their spending was closest to Americans at the other end of the age spectrum -- those over 75 years old spent $3,818 on average per month in 2021. It’s no surprise that Americans toward the middle of the age range are spending the most per month. That segment of the population are likely to make the most money while also having taken on significant financial responsibilities, like raising kids and paying off auto and home loans. As Americans reach retirement age, their spending quickly falls off.

fool.com - American Households' Average Monthly Expenses - The Motley Fool

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