Before you develop a budget or refine the one you have, you may want to compare your income and expenses to the average American household budget. Of course, averages include people in poverty as well as the very wealthy, and cover expensive coastal urban areas with more affordable rural portions of the country. Therefore it is useful to consider percentages of income devoted to certain expenses rather than exact figures.
Overall Income and Expenses
According to a 2009 United States Department of Labor survey of consumer expenditures, the average American household has 2.5 residents and a household gross income of $62,857. Annual spending totals $49,067. The majority, 66 percent, own homes rather than rent. These statistics represent various types of consumer units, including families, single people who live alone, singles who live together but keep finances separate and two or more people who live together and share expenses.
Average Major Household Expenses
A breakdown of the annual expenditures of nearly $50,000 points to housing as the single largest household expense, costing an average of 34.1 percent of income. Note, however, that this figure covers rent or mortgage as well as basic utilities, public services, cleaning supplies, equipment and furnishings. The next largest cost is transportation at 17.6 percent, which includes purchasing cars, fuel and public transportation. Food comes next, at 12.4 percent, covering groceries as well as restaurants. At 10.8 percent, the category of insurance and pensions does not include medical expenses, an additional 5.7 percent of the household budget.
Average Small Household Expenses
Smaller expenses make up the remainder of the average household budget. Americans spend nearly the same, about 3.8 percent, on cash contributions and apparel. Entertainment takes up 5.4 percent. Education costs average 1.9 percent. Many people's favorite category, miscellaneous, totals 1.6 percent of gross income. Hovering slightly above or below 1 percent include personal care, tobacco and alcohol. Reading costs the average household a lowly .2 percent.
These statistics do not include income tax payments. Nor do they include paying off high-interest debt on credit cards and some types of mortgages, car loans or home equity loans. As of 2010, the average individual's credit card debt stood at nearly $5,000. Financial expert Suze Orman recommends that households devote a significant portion of disposable income to paying down their highest-interest debt before dedicating money toward savings.
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