Here's What Americans Are Spending Their Money On. Are They Being Smart About Their Spending?

There are some common expenses just about every American household has, like food and clothing. But people divide up their spending in different ways, depending on their preferences and lifestyle goals.

It's sometimes fun and perhaps even helpful to compare your own personal finances to others like you. So, take a look at what your fellow Americans are spending their money on -- and take the time to both think about whether the distribution of these dollars is smart, and consider how it compares to what you're doing with your own cash.

Here's what Americans are spending money on

According to research from Ramsey Solutions, here's the typical breakdown of household expenses for the average American:

• 33% on housing
• 16.8% on transportation
• 12.8% on food
• 12% on personal insurance and pensions
• 8% on healthcare
• 4.7% on entertainment
• 4.1% on other expenses
• 3.8% on cash contributions
• 2.7% on clothing and services
• 1.8% on education

Housing is unsurprisingly the biggest expense many people have, but unfortunately many people are spending more on it than they should. Most financial experts recommend keeping total housing costs to around 30% or less of your budget -- but Ramsey's data shows most people are spending more than that amount. Unfortunately, paying a mortgage or rent that eats up too much of your monthly income can make it more difficult to accomplish financial goals like saving for retirement.

Many people are also spending more than the recommended 10% on transportation, as evidenced by the fact that typical Americans indicated 16.8% of their money is going toward getting around.

It's not surprising that people are spending a lot on these areas. Housing costs and the price of automobiles have both gone up in recent years, as mortgage rates and home prices skyrocketed, semiconductor chip shortages disrupted the auto market, and used cars were in short supply. Unfortunately, the fact people are devoting such a large portion of their funds to these necessities does leave a lot less for saving and also for fun spending.

Should you spend like a typical American?

It can be helpful to compare your spending to your peers to see if you're going way overboard in some areas. For example, if you're spending 15% of your income on entertainment while most people are only spending about 4.7%, you probably are going a little bit overboard in this area and could find some cuts to make.

But in general, you don't necessarily want or need to spend your money like everyone else. You should aim to follow the general rules of thumb most people aren't following -- like keeping housing and transportation costs to 30% and 10% of income respectively. That's important, because otherwise these fixed expenses can eat up too much of your money.

But beyond that, as long as you're saving enough (ideally 20% of your income) and are keeping the bills paid, you should allocate your funds to the things that make you happiest. If you don't care about clothes at all, for example, but you're a bit of a foodie, then you might want to keep clothing expenditures far lower than the typical person and redirect more of that money to dining.

The important thing is to make a conscious choice -- often by creating a budget -- to spend your money in the way that provides the most value to you. Think about what brings you joy, and what you hope to accomplish with your hard-earned funds, and prioritize those spending categories as the biggest part of your budget.