Many American consumers spend quite a lot of money to keep a roof over their heads today. They have to think about housing costs, groceries, and transportation as their basic needs. Education, health care, child care, entertainment, and retirement savings are among other things to include in household budgets.
Would you like to compare your monthly budget with the median American household budget? Keep on reading to find out the average monthly cost of living.
Average Monthly Expenses by Household Size
It’s essential to have a budget. You won’t be able to reach your financial aims and have enough cash for everything if you don’t have a budget. People often rely on personal small loans when they can’t make the ends meet or don’t have enough savings to finance a big-ticket purchase.
Some people may wonder how their monthly costs compare with the average cost of living for other American households. The household here doesn’t necessarily mean two parents with children. It may have any number of people who can be grandparents, parents, kids, or even unrelated people living together.
The median monthly costs among all households totaled $5,253 or $63,036 per year. It has increased by 3 percent since 2018. The average monthly costs for one person are $3,189 or $38,266 per year.
The median monthly expenses for a family of 2 are $5,572 or $66,861 per year. The average monthly costs for a household of 3 are $6,178 or $74,134 per year. The median monthly costs for a family of 4 are $7,095 or $85,139 annually.
Average Monthly Expenses That Declined
People started spending less on entertainment. This spending category has declined as the Bureau of Labor Statistics shows. Also, there is a decrease in spending on pensions and personal insurance, including Social Security. The “all other expenses” category also experienced a sudden decrease of almost 7%.
Average Monthly Expenses That Increased
The report from the Bureau of Labor Statistics states that eight out of ten of the biggest spending categories increased gradually year after year. Here is how they changed:
- Health care (+4.5%). Health insurance accounted for much of this increase.
- Vehicle purchases (+10.5%)
- Housing costs for rented dwellings (+4.3%)
- Cash contributions (+5.7%). It comprises donations, gifts, child support, and alimony, as well as other expenses.
- Food at home (+4%).
Household Budget Statistics
Whether you own, rent, or are searching to make a change, being informed may help you properly budget for current housing costs. According to the Bureau of Labor Statistics, the average total monthly cost for housing is $1,709. It includes property taxes. People spend about 34.62% of their total income on housing expenses. The average national rent a month was $1,468 in 2020.
The biggest expenses of American consumers are housing and transportation, which included 29 percent and 13 percent of the median budget. According to the Bureau of Labor Statistics, the average family earned $84,352 annually and spent $70,258 annually. Bills and other expenditures comprised around $5,854 per month.
Average Household Savings and Debt Repayment
American families earned an average of $74,949 after taxes in 2020. They spent $61,334 on their household budgets while the rest $13,615 would be utilized for things like paying down student loans, credit cards, or boosting their savings. More consumers should think about increasing their emergency savings.
Not many Americans can boast of having enough funds in their emergency fund to help them deal with unexpected life situations and curveballs. Here are some of the personal saving rates for recent months in 2021:
- November 2021: 6.9 percent
- October 2021: 7.1 percent
- September 2021: 8.1 percent
- August 2021: 9.8 percent
How to Create a Household Budget
It can seem rather challenging to create a household budget but if you follow these steps you will be able to keep track of your finances and boost your savings account while also having enough cash to repay existing debts.
Define a budgeting strategy. There are several budgeting methods you may stick to. A zero-based budget makes every dollar work for you so that you allocate all your income into spending categories including savings until nothing is left. The 50/30/20 budgeting rule means a consumer separates their income into three chunks: needs, wants, and savings. Needs comprise half of your income, want to include 30 percent, and the rest goes to savings.
Start a worksheet. You may write down all your expenses for each month or use an online spreadsheet. Use whatever is convenient for you so that you keep track of your money.
Add your income sources. Some people have a full-time job with a regular income while others might have a side hustle or other additional earnings. Whether you are self-employed, have a side gig, or rental property, you should add up your entire income source to see the real picture.
Keep track. Now it’s time to track your spending by determining how much you allocate into each spending category such as housing, food, transportation, entertainment, health care, debt repayment, and savings. Make certain you mention the fixed costs and those that fluctuate.
Make the necessary adjustments. Once your needs or income change, you will need to adjust your budget accordingly. Modifications will be necessary to meet your monetary goals and stay on track.
The Bottom Line
Here is everything about the average monthly cost of living in the USA. Millions of consumers across the country spend a lot of money on housing expenses. It’s really expensive to have a roof above your head while also thinking about other needs such as health insurance, child support, education, food, transportation, retirement savings, and debt repayment.
Many people live paycheck to paycheck and can’t cover all the necessary expenses or struggle to have enough savings. Use this data to establish your household budget, choose the most suitable budgeting method, keep track of your expenses, and reach your financial targets.