How Your Budget Compares to the Average

How Your Budget Compares to the Average

In 2019, the Bureau of Labor Statistics (BLS) did a study on how the average American spends their money.  It measured information including housing, food, transportation, and even saving for retirement. Not sure how your budget compares to the average American? Here’s what we learned, and what you can do to make sure that you are growing your net worth.

What the Data Says

The average consumer unit (families, single people, or two or more people living together sharing expenses) spent $63,036 per year in 2019. 

Housing was the largest budget item followed by transportation then food. 

The housing category includes mortgages, rent, and other expenses. 

The transportation category includes the cost of a vehicle, gas, insurance, and public transportation. 

Food includes household groceries and eating out at restaurants. Typically those two would be split in a budget so they can be managed individually.

The next highest budget categories were personal insurance and pensions, healthcare, and finally other consumer goods.

This table shows the breakdown of different spending categories. Numbers are expressed in a percentage of the household income.

Spending category


% of Budget



- Food at home


- Food away from home


Alcoholic beverages




- Shelter


- Utilities, fuels, and public services


- Household operations


- Housekeeping supplies


- Household furnishings and equipment


Apparel and services




- Vehicle purchases (net outlay)


- Gasoline, other fuels, and motor oil


- Other vehicle expenses


- Gasoline, other fuels, and motor oil






Personal care products and services






Tobacco products and smoking supplies




Cash contributions


Personal insurance and pensions


- Life and other personal insurance


- Pensions and Social Security


This data shows that about a third of overall household spending goes toward housing. 

Sadly reading is the smallest budget item on the table, although libraries are free, so I’m not sure why the BLS even bothered to include it. Child care would probably make more sense, but it only applies to a small segment of the population.


What’s Wrong with the Average American Budget?

My biggest gripe with the data above is there is no mention of savings!!! What about money you spend on your future self? What about the money you invest and let it grow on its own. Or another missing item, debt reduction… All these needs to be accounted for in a solid budget.

The “cash contributions” category above is more like a gift category than a savings category. Per the BLS website:  "cash contributions category is a catch all that includes financial support for college students living away from home, alimony and child support payments, and personal cash gifts, such as those for birthdays or weddings. Also included are cash donations to religious, educational, charitable, and political organizations, as well as gifts of stocks, bonds, and mutual funds made to persons or organizations outside the household"

The simple act of adding ‘savings’ as a budget line item can lead people toward financial independence. When people have a budget that they follow, they can both plan and track their savings for retirement.

Some find it helpful to break out a budget in terms of needs, wants and savings



Food - Groceries (eating at home)


- Rent / mortgage payment

- Household supplies

- House maintenance


- Car payment / depreciation

- Gas, electricity

- Maintenance, title fees

- Public and other transportation


- TV

- Internet

- Phone

- Electricity

- Water

- Garbage


- Auto

- Home / renters

- Umbrella

- Life Insurance


- Insurance

- Copays / Deductibles

- Prescriptions

Child Care

- Day Care

- Diapers

- Formula / baby food



Food - Dining (eating out)


- Clothing

- Education

- Hobbies / lessons




Pet (food, medical checkups, supplies)



Retirement Savings

Vacation Savings

Home Down Payment Savings

Debt Reduction (pay off credit card, vehicle loan, or mortgage)

Child College Savings

Wedding Fund

Vacation Fund

Emergency Fun

In terms of prioritizing the savings category, an emergency fund is the smart thing to do first. Sudden expenses pop up such as home or auto repairs, medical expenses, or loss of income. Having an emergency fund can provide peace of mind and overall financial security. From there looking at a combination of debt reduction and saving for other big goals makes the most sense. Debt reduction especially matters for high interest debt.


There's Nothing Wrong With Getting Rich Slowly:

There are about 12 million households in the USA that have reached millionaire status. Some figures include home equity, others only look at cash, stocks / bonds, rentals, etc. In general it adds up to about 10% of households. Being a millionaire puts you WAY above the average net worth.

Consider that it is possible to become a millionaire, and even a multi-millionaire ($2M+) given steady savings. 

For example, let’s say a family earning $75,000 per year is able to save 15% of their income, or $937 per month. If they invest for 30 years in a 70/30 portfolio of stocks and bonds, they would have contributed just over $456,000 in total. However, due to the power of compounding returns, on average, they would have a resulting balance of approximately $2 million. Our Saving for Retirement calculator computed these numbers for us

In this case the time they had (30 years) is arguably more important than how much they saved each month. The sooner you start saving the easier it is to reach these above average heights.

In retirement at a 4% safe withdrawal rate, they are looking at $80k per year in retirement income, on top of whatever they get from social security, pensions, etc. That isn’t too bad for putting away just 15%.

Checkout our Saving for Retirement Calculator to see the numbers and experiment on your own.

The only way to do this is to include a category for saving / retirement in your budget. Your savings strategy will impact your net worth as well as your ability to retire.


Why the Average Budget Might Not Be a Representative Budget

If you compare your household budget to the average American’s budget shown above, you might realize that some things are missing from the average American’s budget. We already discussed that there is no ‘savings’ line item, but it is also missing important factors including childcare, education (for your kids), and more. Therefore, do not worry if your budget does not look like the average American’s. What is more important is that you are budgeting to achieve you and your family’s goals.

The BLS tracks how spending changes with age. Not surprisingly it shows that as income goes up, so do expenses. It may be that a higher income allows people to spend more. It may also be that higher expenses (such as having children) necessitate earning more… Probably a little bit of both.

Additionally, your budget will change over time. If you choose to have kids, you may want to start saving for their education early. You may also see an increase in income over time that allows you to move into a larger home. After your kids are grown, you will no longer have an educational expense to save for and might also consider downsizing your home. You may also free up space in your budget when you finish paying off a home. Regardless, your budget will likely change over time and differ from the average American’s budget.

The goal of budgeting is to provide financial security and ultimately increase your net worth. By budgeting, you will be able to track your earnings, spending, and saving. You will be able to adjust your spending as well as savings contributions as needed to reach your financial goals.


The Bottom Line

The average American may or may not have a budget that they follow. However, financial professionals will almost always recommend that a single person or family have a budget and that they evaluate it regularly. This will help people see where they need to cut back on certain line items, and where they can further contribute to their financial goals.

The average American allocates about 30% of their overall spending toward housing costs. The second-largest line item for the average American’s budget is transportation, which likely includes both public transportation, private vehicles, car insurance, and gas costs. 

If you setup a line item for “saving money” and stick to that, over time it can add up to a huge amount of money and a very comfortable financial situation.

BLS 2019 survey data

The post How Your Budget Compares to the Average is part of a series on personal finances and financial literacy published at Wealth Meta. This entry was posted in Financial Literacy, Budgeting
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