Published in: Credit Cards | April 28, 2020
By: Christy Bieber
You may be surprised to find the average American spends close to 20% of their income just on getting around. Here's what you can do to reduce what you spend.
Most Americans have a lot of different expenses in their budget. Some of these are fixed, such as housing and insurance premiums. Others are discretionary, such as entertainment or grocery expenses. And these discretionary expenses often get a lot of attention when it comes to looking for places to cut spending.
There's another line item in your budget you should pay attention to, though: transportation. Transportation costs are undoubtedly essential because you have to get from Point A to Point B. But you'd be surprised by how much most Americans are spending on transportation according to recent research from The Ascent on the average American's monthly expenses.
According to the study, transportation is actually the second largest expenditure for most American families. Americans spend about 16% of their income on it, with monthly costs coming in at a whopping $813 on average. These costs include:
Of course, these are average costs. Most of us obviously aren't spending $42 a month on airfare, but instead spend several hundred dollars on a ticket a few times a year when going on vacation. This still adds up to a lot of money, and it accounts for a large percentage of household spending.
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One of the best ways to cut your transportation costs is to opt for a less expensive used vehicle to minimize your car loan payment. If you can find a recent-model reliable used car with a manufacturer warranty, you can save thousands compared to buying a brand-new vehicle. You can invest the difference in a savings account and hopefully save enough to buy your next car in cash, especially if you drive your current one for as long as possible.
You can also combine trips so you aren't using as much gas and make sure you get the best gas mileage possible by driving the speed limit, keeping your car's air filters clean, and avoiding toting around a lot of extraneous stuff that makes your vehicle heavier. If you have friends from work you live close to you, carpooling could also cut transportation costs while making commuting more fun.
If you live in an area where it's possible to do so, you may also want to think about walking, biking, or taking public transportation more often, too. This is good for both your wallet and the planet.
You don't want to be housebound, and walking everywhere definitely isn't practical for most people. Still, there is plenty of opportunity to reduce the amount you're spending on transportation.
And since transportation accounts for such a large portion of the typical household's expenditures, any changes you make could have a big impact on your overall budget. In fact, cutting your transportation costs could free up a lot of cash that you can then use to pay down credit card debt or accomplish other important financial goals.
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