How does your family budget compare to a typical budget?

The Typical Family's Budget

by Gary Foreman

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The Smith family knew where their money went. But Mary struggled trying to decide where they could cut expenses. It didn't seem like they were being extravagant with their food budget, but she wondered how would she know if they really were spending too much for food or in any area. Perhaps if they knew what other families were spending they would have something to compare with their expenses. But where could they go to find out what people are spending? After all, you don't just lean over the back fence and ask your neighbors how much they spend on housing!

So Mary set off to do some research. She took a look at the Statistical Abstract of the United States. In it is a wealth of information about what people earn and spend. And it was just a few nights later that Mary and John sat down to study how the average American family spends it's money. John was already studying the numbers. All the major categories were covered. Food, housing, transportation, medical, etc. Many were broken down into smaller pieces. For instance, food included 'food at home' and 'food away from home'. "Hey Mary, look at this. Housing took up about 34% of the annual income. I believe I read that mortgage companies say that you can safely spend about 30 to 35% of your money on housing."

"Now here's an area where people could save some money." John had begun to use a more critical eye in examining the reports. "For food away from home they spend 5.3%. The total for all food is only 12.8%." Mary reminded John that some of the away from home expense included his lunches at work. She had been bugging him about bringing a sandwich or leftovers to work to save some money.

John and Mary spent the next hour studying and discussing what they had found. They found that where you live and the size of your family did make some difference in expenses. But, overall they found that most people could compare to the averages and learn a great deal about their own spending.

The main categories are copied below so that you can study them, too. John and Mary were already beginning to discuss ways that they could use the comparison to help them identify areas that were candidates for cost cutting. But, we'll eavesdrop on that conversation in another article.

Note: Click on a category below to find ways to trim a particular area of your budget.

Typical Family Expenses
Category $ Spent % of Total
Food $6,372 12.78
food at home
$3,753 7.64
food away from home
$2,619 5.33
Alcoholic Beverages $435 0.88
Housing $16,895 34.43
$10,075 20.53
$3,645 7.42
Clothing $1,725 3.51
Transportation $7,658 15.60
vehicle purchases
$2,657 5.41
gas & oil
$1,986 4.04
other vehicle expenses
$2,536 5.16
Health Care $3,126 6.37
Entertainment $2,693 5.48
Reading $110 0.22
Tobacco $380 0.77
Personal Insurance & Pensions $5,471 11.15
Life & other Personal Insurance $309 0.62
Pensions & Social Security $5,162 10.52
Total $49,067

note: Not all expenses included. Table will not total due to omissions.

editor's note: updated January, 2013

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Gary Foreman

Gary Foreman is a former financial planner and purchasing manager who founded The Dollar website and newsletters in 1996. He's been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money and You can follow Gary on Twitter or visit Gary Foreman on Google+. Gary is also available for audio, video or print interviews. For more info see his media page.

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