In reality, only 1 out of 3 Americans know their monthly budget. If you’re one of the people that find yourself living paycheck-to-paycheck, it might be time to budget in order to decide what you need and what you want. A budget can help you visualize where exactly all your money is going. If only 1 in 3 knows their budget, it may be a good idea to see how do Americans spend their money.
The Bureau of Labor Statistics surveyed Americans to see how they spend their money. Looking at the spending tendencies of the average American with an income of $74,664 before, these are the results:
The total annual average that Americans spend all these expenditures is $57,311 of the total income. The income is also before taxes, so one would have to keep in mind that the income is less than $74,000. So, how do Americans spend their money?
One-third of Americans expenses are spent on housing, which is actually a red flag. The federal government says Americans should spend no more than 30% of their annual income on housing. Those who spend more than that are at a greater risk of being unable to afford the necessities. An average American spends 32.9% on housing, which is more than suggested.
Americans spend more on housing than healthcare, entertainment, clothing, and other expenditures combined. Banks and other institutions break down your income to expense budget to follow with the 50/20/30 guide.
The second biggest expense for the average American is the transportation cost. While it is half of the housing cost, it still comes out to approximately $754 a month. This budget includes the down payment on the car, gas, oil changes, repairs, and insurance. Between housing and transportation, it almost adds up to the rest of your expenses combined.
Luckily, there are many tricks to transportation that you can use to try and cut down your transportation spending. Between insurance loyalty, gas, and repairs, there are ways to prevent spending too much on a car.
The third highest amount of spending done each year, this can always vary depending on the size of the family. Average Americans spend about $138 a week on food between groceries and eating out.
This is an even better portion of spending where you can decrease the money and percentage in this category. There are coupons, eating out less, and even bigger food memberships. Start saving money on food to be applied to other categories of your spending.
There are many ways to budget your money each month, with loads of resources on the internet to guide you through it each month.
If you have a steady income, it’s easier to budget monthly. If you don’t, try to ballpark the average amount you do take in. One of the best ways to figure out your monthly income is to deduct taxes, pension plans, and other deductions like healthcare.
Fixed expenses are easier to document: mortgage, car payments, student loans, and other loans. They are constant every month and you know what to plan for. Variable expenses are the things that fluctuate like groceries, gas, and more. Record how much you spend every month and take the average.
It’s a good idea to try and put money aside every month, no matter how much. Financial experts even say 10% of your total, post-tax income each year is a better start than nothing. You can break that down each month or when tax returns come around.
Your spending habits are important to a budget. Finding out where you’re spending too much unnecessary money can help you save in the end. Keep your receipts or check your online bank statement each time you go on a shopping spree.
Now you know how do Americans spend their money!
If you’re living paycheck-to-paycheck, you may need a boost to help you with some bills or other expenses like your housing. TFC Title Loans can help you get the cash you need by using the title of your vehicle as collateral for an auto title loan. By applying online, you can get the cash you need in as little as one business day! Get started today!