American Households' Average Monthly Expenses: $5,111

The average monthly expenses for American households are $5,111, according to the most recent Consumer Expenditure Survey from the U.S. Bureau of Labor Statistics (BLS).

Where does all that money go? For the typical person, it covers quite a few different things from major costs like payments to their mortgage lender and groceries to smaller expenses like apparel.

By peeking into the national average budget for all these categories, we can get a better idea of where people spend the most and how our own spending habits compare.

Key findings

• The average household's monthly expenses are $5,111 ($61,334 per year).
• The average annual income after taxes is $74,949.
• Housing is the largest average cost at $1,784 per month, making up 34.9% of typical spending.
• Americans spend $610 on food per month, with about two-thirds being spent on groceries and the rest on eating out.
• Transportation costs more than many realize ($819 per month), largely due to the intermittent nature of these expenses.
• Healthcare spending averages $431 per month.
• The average single person spends $329 more per year than their take-home pay.

Average monthly expenses per household: $5,111

The average expenses per month for one consumer unit in 2020 was $5,111. That means the average spending per year is $61,334.

Keep in mind that living cost varies by region -- some cities are very affordable, while others are extremely expensive. The figures presented below are national averages.

Consumer spending in the United States had been steadily increasing, but 2020 was a departure from that trend, likely because of the COVID-19 pandemic. Average expenses decreased by 2.7% from 2019 to 2020.

You might be wondering what exactly counts as a consumer unit. The BLS defines a consumer unit as any of the following:

• Families
• Single persons living alone
• Single persons sharing a household with others but are financially independent
• Two or more people living together and sharing major expenses

For example, two parents and a child would be one consumer unit. Three roommates would be three consumer units. The average consumer unit is 2.5 people.

Average annual income per household: $74,949

The average American household's annual income after taxes is $74,949. Average pre-tax income is $84,352.

Based on the income and spending figures, Americans spend 82% of their income after taxes and have a savings rate of 18%. That's close to the recommended savings rate of at least 20%.

While the amount you save is most important, where you put that money also matters. The best option is a high-yield savings account to maximize the interest you earn.

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Where Americans spend their money

Here's a full breakdown of the average spending by category:

A quick note about monthly spending

The BLS survey only calculates annual spending, so we divided those numbers by 12 to get the average household expenses per month. Because we rounded to the nearest dollar, there may be small discrepancies when comparing the monthly and annual numbers.

It's also worth noting that not all of the typical expenses are monthly expenses. Some of these expenses are intermittent. For example, most people aren't spending $196 per month on furniture and appliances. But over the course of the year, the average is $2,346.

Average monthly spending on housing: $1,784 (34.9%)

Housing is the biggest living expense in the national average budget by a wide margin, and it increased by 3.5% in 2020.

Of the $1,784 per month that Americans spend on housing, $1,050 of it goes towards housing payments. This fluctuates quite a bit depending on a person's living situation. Average housing costs can be anywhere from under $1,000 to over $3,000 depending on the area. Housing size and whether a person has roommates also have a big impact on how much they spend here.

Here's a more detailed look at the different expenses of home ownership and how much Americans spend on them:

Average monthly spending on transportation: $819 (16.0%)

Transportation is the second-largest monthly expenditure, but Americans have been spending less on it. National average transportation spending decreased by 8.5% from 2019 to 2020.

It's easy to miss just how much we spend on transportation, because some of the bigger expenses are intermittent. Maintenance and repairs aren't necessary every month, but they add up to $879 per year. Most people don't buy new vehicles often, but when they do, it's a major purchase. Depending on the payment schedule you choose, auto insurance could be a monthly expense or one that you pay twice a year.

Average monthly food spending: $610 (12.0%)

Food spending includes groceries and food away from home, which is any food that you pay someone else to prepare for you. It decreased by 10.4% from 2019 to 2020.

There's one clear reason for that drop in food spending, and it probably won't come as a surprise considering the circumstances in 2020: people seriously cut back on dining.

The average American spent over $1,000 less on food away from home in 2020 ($2,375) than in 2019 ($3,526). Overall, spending dropped by 32.6% in this category. Grocery spending, on the other hand, increased by 6.4%. If you've seen your own supermarket spending increase, a grocery credit card could help you save on that.

Average monthly personal insurance and pension spending: $604 (11.8%)

Personal insurance and pensions accounted for $604 in monthly spending. That was a slight (1.1%) increase from 2019.

To clarify, this category includes life insurance, personal liability insurance, accident insurance, and disability insurance. It doesn't include homeowners insurance or renters insurance, which are part of housing costs, or auto insurance, which is part of transportation.

Only 6.7% of spending in this category goes towards personal insurance. The remaining 93.3% goes to pensions and Social Security. That category includes contributions to retirement accounts and the Social Security benefits withheld from your paycheck.

Average monthly healthcare spending: $431 (8.4%)

Despite the COVID-19 pandemic, healthcare spending didn't change much in 2020. It decreased by 0.3% from the previous year.

Just over 70% of that spending went towards health insurance premiums, which cost an average of $306. That probably sounds low for health insurance. It's partly because many people pay less due to tax credits, employer-paid premiums, Medicare, and Medicaid. In addition, 8.6% of Americans don't have health insurance, according to the U.S. Census Bureau.

Average monthly spending on entertainment: $243 (4.7%)

Americans spend 4.7% of their monthly budgets on entertainment. Spending in this category decreased by 5.8% in 2020.

The BLS made some interesting decisions in what was and wasn't considered entertainment. As entertaining as pets can be, pet owners would probably argue that they deserve their own category. Avid readers may be surprised to learn that reading doesn't fall under entertainment (it has its own category instead).

Average monthly spending on apparel and services: $120 (2.3%)

It's safe to say that people weren't too concerned about dressing up during the early days of the pandemic. Apparel spending plummeted in 2020, dropping by 23.8% from the year before.

Average monthly expenses by household size

So far, we've looked at the average living expenses per consumer unit, which represents the average household. But many households won't fit into the average.

If you're a single person, you're probably interested in the average monthly expenses for one person. And those with larger families may want to see what the typical spending habits are like in similar households.

As it turns out, single-person households have it much harder financially than households with two or more people. In fact, single people spent $329 per year more than their after-tax income.

How do your average monthly expenses compare?

It's interesting to see what the typical American spending habits look like and compare them to your own. Maybe you find that you spend similar portions of your monthly income in each category, or your spending patterns could be completely different.

Neither on its own is a good or a bad thing. We all have different things we value and different areas where we're willing to spend more money. If you're happy with your spending habits and you feel financially secure, that's what's important.

If you're not able to save as much money as you like, then it's a good idea to reevaluate your typical spending and your budget. Whether it's dining out, entertainment, or something else, there could be an area where you're spending more than you realize and are able to cut back.

Sources

• U.S. Bureau of Labor Statistics (2021). "2020 Consumer Expenditure Survey."
• U.S. Bureau of Labor Statistics (2021). "Consumer expenditures in 2020."
• U.S. Bureau of Labor Statistics (2021). "Table 1400. Size of consumer unit: Annual expenditure means, shares, standard errors, and coefficients of variation, Consumer
• Expenditure Surveys, 2020."
• United States Census Bureau (2021). "Health Insurance Coverage in the United States: 2020."