The information in this publication identifies where the average American spends their money, which can serve as a basis of comparison with your own budget. While everyone's situation is unique, the dominant categories may offer the most room for improvement.
The Average American
In 2012, the average American 'consumer unit' spent $51,500. Here's how:
Housing and transportation account for one-half of total expenses; food, healthcare, and entertainment comprise the next quarter.
(In this graph, 'everything else' includes apparel and services, education, personal care products and services, cash contributions, smoking supplies, and the final catch-all 'miscellaneous'. To learn more about which expenditures fit into which categories, see the BLS Glossary.)
Housing
Housing costs account for one-third of expenditures ($16,900/year, $1,400/month).
Transportation
Transportation costs account for one-sixth of expenditures ($9,000/year, $750/month).
Food
Food costs account for one-eighth of expenditures ($6,600/year, $550/month).
Insurance/Pensions
Insurance and pension costs account for one-tenth of expenditures ($5,600/year, $470/month).
Healthcare
Healthcare costs account for one-fifteenth of expenditures ($3,600/year, $300/month).
Entertainment
Entertainment costs account for one-twentieth of expenditures ($2,600/year, $220/month).
Everything Else
Everything else accounts for one-seventh of expenditures ($7,200/year, $600/month).
*cash contributions include donations, child support, etc.
Conclusions
Look carefully again at the old Financial Independence graph:
Now take a look at the trend in the American savings rate:
Now take a look at the trend in the American savings rate:
If you want a retirement like your great-grandparents may have enjoyed, you better start saving like they did.
Use a tool like Mint.com to start tracking your own expenditures. Then, take a look at your own category breakdowns and start thinking about where you might be able to trim some fat.
Tomorrow, we'll consider another potential budget.
