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8 Expenses That Account for 87% of the Average Household Budget

By Maurie Backman – Updated Aug 14, 2017 at 4:25PM

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Apparently, here's where all of our money goes.

Smiling family holding up an American flag


Americans don't tend to mind their own business and keep to themselves. Given the amount of time we spend on social media and the like, it's clear that many of us have a natural curiosity when it comes to what those around us are not only doing, but spending. With that in mind, here's an overview of what the average American's household budget looks like, courtesy of ValuePenguin. Take a look, and see how your personal expenses compare.




In 2013, the average American household spent $10,080 to put a roof over its head. In fact, housing continues to be most Americans' greatest monthly expense, and back in 2013, it accounted for 16% of the typical household's budget. And that's actually not a terrible number.

Generally speaking, it's best to keep your housing costs at or below 30% of your take-home pay. Given that the typical household earned $63,784 in the year this data was collected, even when we factor in taxes, that $10,080 a year falls well below the 30% mark -- which means that more Americans are finally recognizing how critical it is to keep their housing affordable.

Car on the road



Second to housing, Americans spend the most money on transportation. In 2013, the typical household dropped $9,004 to get around. And given that 95% of U.S. households own a vehicle, a lot of that expense most likely boils down to car payments, insurance, and maintenance. In fact, AAA estimates that it costs $8,700 a year, on average, to have a car of one's own, so if you have the option to unload that vehicle in favor of public transportation, you stand to save a bundle.

Imagine you live in Washington, D.C., which happens to have the highest public transportation cost in the nation. If you were to spend the $2,844 a year it takes, on average, to commute in D.C., and subtract it from the $8,700 a vehicle might cost, you'd have an extra $5,856 in your yearly budget to work with.

Tax forms



Many Americans loathe paying taxes, and for good reason. In 2013, the average household forked over 12% of its budget to the IRS for a total of $7,432. Ouch.

The good news, however, is that there are a number of simple ways to lower your taxes and pocket more of your hard-earned cash. Traditional IRA or 401(k) contributions act as an instant tax deduction, and the more money you put into your retirement account, the more financial security you'll have in the future. There are also a number of tax breaks designed specifically for homeowners, so it pays to read up on the benefits you may be entitled to.

Fixing a drain


Utilities and household maintenance

It costs money to run a household, from keeping the lights on to making sure the floor is clean. All told, Americans spent $7,068 in 2013 on things like heating, electricity, water, and the like.

Most of these expenses are non-negotiable for the most part. Sure, you can do a better of job of turning off the lights when you aren't using them, but you can't be expected to spend your summers sweating it out to save money on air conditioning. On the other hand, if there are household maintenance items you're currently outsourcing, like trimming the bushes or staining the deck, doing them yourself could save you several hundred dollars a year or more.

Family eating a meal



We all need to eat, so it's no surprise that the average household spent $6,602 in 2013 to keep itself nourished. If that number sounds high, consider the fact that restaurant and takeout meals typically come at a 300% markup, which means that every time you pay someone $30 to prepare your food, you're paying $20 more than you would by making it at home. If you're looking to reduce your food costs, clipping grocery store coupons will help -- but eliminating restaurant meals and takeout will make much more of a dent.

Social Security card


Social Security contributions, personal insurance, and pensions

Sometimes, we all need to spend a little money today to protect ourselves in the future. In 2013, the typical household spent $5,528 on Social Security taxes (which, if you're a salaried employee, currently equal 6.2% of your first $127,200 in earnings), plus personal insurance (such as life and disability) and pensions. Of course, given that many companies began phasing out pensions well before 2013, it's safe to say that the first two components ate up the bulk of that $5,528.

Savings jar


Debt payments or savings

In 2013, the average household spent $5,252 on debt payments and savings. Now, to be fair, we don't know exactly how this figure breaks down between the two, but since these categories are lumped together, we can assume that some households spent $5,252 (or more) on debt payments alone, while others managed to put that $5,252 into savings. In the case of the former, that's a lot of money to be spending on debt, even if that figure does include student loans, as opposed to high-interest credit card payments.

On the other hand, $5,252 is a respectable amount to be saving when you're dealing with a $63,784 salary. Most working Americans should be consistently putting away 10% to 15% (or more, if possible) of their post-tax earnings. If we back out the tax payments and Social Security contributions above, we can see that $5,252 puts smart savers right within that range.

Sick man in bed



Perhaps the most surprising item on this list is none other than healthcare, which in 2013 cost the average American household $3,631. And that's a lot less than you might expect. However, when we look more closely at the data, we see that only 79% of households had healthcare expenses in 2013 to begin with, which means the remainder were most likely uninsured.

Today, nearly 12% of Americans are without health insurance, and given that the average cost of an unsubsidized individual plan is $4,716 a year, it's easy to see why. Family plans are even pricier, costing a whopping $12,252, on average, in the absence of a subsidy. What all of this tells us is that unlike back in 2013, healthcare today is likely to cost the typical U.S. family more than a mere 6% of its budget.

While some of these expense categories have more wiggle room than others, if you're currently spending too much in any particular area, it pays to take a step back and see whether you have the option to lower your costs. Though you can't do anything about Social Security taxes, you can work on keeping your transportation, food, and even housing costs to a minimum -- and that will buy you a degree of flexibility you'll come to appreciate.

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