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The Spending Habits of the Average American Print
Tuesday, 14th July 2009 (by J.D.)This article is about Consumerism, Economics, News
Last week, Diane dropped a line asking for information about the spending habits of the average American. She wrote:
I am trying to find sites that will provide average spending habits — such as how much an average person spends on food per week or how much a family spends on entertainment, that sort of thing. I am hoping to see where my habits line up with someone of similar means in the same part of the country.
I’m not sure of how to obtain regional information, but I know where to find national figures for comparison. Last week, a site called Visual Economics posted a chart showing where the average U.S. consumer spends her money. Here’s the chart in question, which has been making the rounds of the internet:
Click to open at full size in a new window.
Because I’m a skeptic by nature, I tracked down the source material used to create this chart. The data is drawn from the U.S. Department of Labor Statistics Consumer Expenditure Survey for 2007. Most writers seem to be missing this point (probably because the chart itself has a date of April 2009), but it’s an important one. This chart represents consumer behavior before the market meltdown — not after. (Here’s the source data [297k PDF].)
Some of the interesting bits from this survey:
- The average “consumer unit” surveyed had 2.5 people, of which 1.3 were wage-earners. This consumer unit earned $63,091 and had 1.9 vehicles. Exactly two-thirds owned their homes.
- This average consumer unit spent $49,648 in 2007.
- Average food spending was $6133, of which $3465 was spent on meals at home. Based on this data, one can conclude that the average consumer unit spends roughly $300 per month on meals prepared at home and roughly $225 per month on meals away from home.
- Average spending for housing was $16,920 for the year, which was way up from the $15,167 average for 2005. That’s an 11.6% increase in housing costs over just two years! Can you say “housing bubble”?
- I was surprised by the transportation costs. The average consumer unit spent $8758 on transportation, or about $725 per month. Holy cats! That’s insane. The average household could save big bucks quickly by optimizing their transportation costs.
Several readers asked for my opinion about this chart, including Sarah M., who wrote via Twitter: “I’d love to see your thoughts comparing the average annual consumer’s spending breakdown to what it should be!”
I don’t think it’s possible to say what the average consumer’s spending should be. There are too many variables. What works for me may not work for you. Each year, the average American spends $1881 on “apparel and services”, for example, but only $118 on books. My spending for these categories is nearly the opposite. In 2007, I spent $702.73 on books and $425.94 on clothing.
I actually think the source data [297k PDF] could be a great basis for a budget. I always have trouble deciding which categories to track in Quicken. If I opted to use the same category structure that the government uses when tracking consumer spending, I could easily compare my habits with the “average” American. (Too bad the government doesn’t track spending on comic books!)
Also, I’m puzzled as to why taxes aren’t included in this information at all. The chart doesn’t include taxes because the government survey doesn’t include taxes. If the average consumer unit earns $63,091 but spends $49,648, there are $13,443 unaccounted for. The personal saving rate in 2007 was less than 1%, so I’m guessing that most of the unspecified money goes to taxes.
Finally, I should note that last year we took a glimpse at the spending of the average American as revealed by The New York Times and the Consumer Price Index.
In my recent reader survey, there were many requests for more content aimed at non-U.S. readers. It’s unlikely I’ll devote entire articles to foreign issues, but when possible — such as today — I’ll try to find resources to help you do your own research. Here are similar surveys in other countries:
- Statistics Canada: Spending Patterns in Canada
- Australian Bureau of Statistics: Household Expenditure Survey, Australia
- U.K. National Statistics: Family Spending, Expenditure and Food Survey
How do your spending habits compare to those of the “average” American? I’m especially curious to hear how much GRS readers spend on books. The average of $118 per year doesn’t buy a lot of reading material. On the other hand, maybe people are using their public libraries! (One can dream, right?)
July 14th, 2009 at 5:19 am
Like most Americans my spending habits are higher than the avg in some places and lower in others.
The BLS offers fantastic data, and I’d like to add another site to that. The St. Louis Fed http://research.stlouisfed.org/fred2/ has great data too. They allow you to build charts and compare economic statistics. I use it for research all the time.
July 14th, 2009 at 5:35 am
I actually spend more than $118 on books AND I use the library! My husband and I are avid readers. Also, I almost choked when I saw the transportation costs. I wonder why so many people live so far away from their jobs? I know a couple who could probably afford a $500-$600 higher mortgage payment just by moving closer to the city they both work in (they also lose at least 1.5 hours a day in their commute).
July 14th, 2009 at 5:37 am
My first reaction upon reading through the whole chart was, “why aren’t books included in entertainment?” I guess not all books are entertainment, but 90% of what I read is for fun. I generally either pull from my existing personal library (supplemented by book sales) or from a public library.
I spend less on things like transportation (we only have 1 car and I usually bike to work), entertainment, and clothing, and significantly more on housing (I live in the DC area) and cash contributions (I tithe).
Re: transportation costs: this includes car purchases. I think most “units” buy 1 car every 3-4 years. If the average purchase price is somewhere around $25k, then this chart actually seems low. I have to wonder what the “expenses, other transportation” part covers though - seems like a lot unless at least one member of the household is taking public transportation every day, which I know doesn’t happen in the average household.
July 14th, 2009 at 5:41 am
I’m not an American nor do I live in the US, but books being my only real extravagance, I spend a fair amount of money on them. I don’t have exact numbers but probably spend like $100 US on books every few months, and have a running list of books that I want to buy. Then, occasionally, I will buy single books that bust through that figure right away; reference litterature tends to be anything but cheap! In my professional field (computing), it’s very easy to spend $50-$75 on a single paperback-bound reference book and they are usually NOT available in libraries, or are so only in very old revisions that are completely out of date by the time you get your hands on them.
I use the public library, definitely, but there is something to be said for having reference litterature that you can turn to at any time, make annotations in, and so on. And to me, with many books, that’s worth the cost of buying a copy of my own.
July 14th, 2009 at 5:43 am
Regarding books — we fold them into “entertainment” or “personal play money” in our budget, depending if they’re for the household or for one person individually. We’re both avid readers, and constantly reading new books… from the library. I’d say we spend under $60 a year for books, aside from books we want to own that we request from family for Christmas, etc.
July 14th, 2009 at 5:51 am
Wow. We are so far off this map it isn’t even funny! Our average income is about the same, but for 8 people living on 1 income. There’s no tobacco or alcohol expenses, but our cash donations are a full 15% of our income. Working at home our transportation is a fraction of average, as is our apparel, furnishings, etc. Because we homeschool, our schooling and books cost is higher. We have no health insurance, so that outlay is much smaller, but our medical expense is also lower. Our car is paid for.
The biggest difference I can see off the top is food. Americans are so lucky to only spend 12% of their income on food! France is more like 20%, the rest of Europe runs at least 15% on average. I’d say our family averages close to 18%, but we have committed to an expensive route, not choosing the least expensive Standard American processed food diet.
July 14th, 2009 at 5:59 am
I don’t track books separately - I have a certain amount of “non-bill/non-savings” money and I use that however I want. I’m willing to bet it’s more than $118 a year though - I use paperbackswap (not free, but much cheaper than new), I work in a library and I trade books with friends quite often.
Transportation costs: I get a lot of flack for living so far from where I work (1 hour on the interstate with almost no traffic), but for my husband and I it’s the best choice. Our jobs are over an hour apart from each other, and we made the decision to live closer to his because we want to be close to my stepson. I easily make twice as much money as I would if I looked for a job “up there”, so I’ve never considered looking for another job.
July 14th, 2009 at 6:00 am
I’m surprised that there isn’t a pets category of spending. Would that fall under misc? I spend an average of about $150 a month on food, pet sitting and vet visits on my dog.
Also, I agree with Matt @#3, I wonder what would fall under other transportation. I take several flights a year to visit family. At $350-900 a pop, that adds up quickly! The high transportation spending is not that surprising considering an average of 1.9 cars per household. You add up insurance, one or two car payments, gas, parts and repairs, oil changes, tolls, registration, etc. - that could easily get up to $725. I think the take away is that cars are *expensive*!
And my book spending is definitely pretty low because of the library! Saves on entertainment costs too with DVDs to borrow.
July 14th, 2009 at 6:09 am
@JD, The reason taxes aren’t included is because the Consumer Expenditure Survey is exactly what it’s name implies and nothing more. It’s to analyze spending habits, taxes are an entirely different animal than spending.
@Matt, Keep in mind that “reading” does not just cover books. Magazines, newspapers, and other forms of reading would be included here also. As for your point on transportation, keep in mind that this is the “average” consumer. Someone in the middle class may buy a $25K car every 4 years, but someone working min wage is more likely to still be driving the beater they bought in the 90’s, or even just taking public transportation. The same applies to what Allison said about flights. She might spend several grand a year on air travel, but there are tens of millions of people in this country who have never even been on an airplane.
July 14th, 2009 at 6:23 am
I use the public library for books - but I probably spend around $100 a year on magazine / Sunday newspaper subscriptions. Very interesting post.
July 14th, 2009 at 6:27 am
J.D., thanks for the Stats Can link. It’s interesting that Canada goes by “household” whereas the US data above goes by “consumer unit”. (2.5 people? really?)
It’s interesting to see the difference. For example, in 2007 Canadians spent twice as much on books, less on healthcare (for obvious reasons), more on transportation, but less on housing. I’m not sure how the taxes measure up.
July 14th, 2009 at 6:29 am
Mint.com provides regional spending information, but only comparing you against other Mint.com users (who might be more financially savvy than your average American).
July 14th, 2009 at 6:32 am
We spend next to nothing on books, and use our public and university libraries almost exclusively, and this is with three kids and one graduate student. Then again, my husband is a librarian…
July 14th, 2009 at 6:49 am
I’m not able to provide a link but I recall reading somewhere that a large percentage of Americans never read a book after they finish high school. That group would obviously pull the average-book-spending number down a good bit. It could be that those who do buy books regularly spend far more than the average number being cited in the analysis.
Rob
July 14th, 2009 at 6:53 am
My spending on books is probably pretty close to average. My wife and I use our public library pretty heavily. (During the summer, we ride our bikes to the library with our kids on the weekend) My wife likes to read romance novels which are pretty cheap to buy (I think they average 2 to 3 dollars for a paperback) and she trades them back and forth with her sister and mother. They are really a very cheap form of entertainment. I’m more of a sci-fi reader and like to buy my books in hard cover, but I probably only buy two to three books a year that way.
We don’t subscribe to any magazines or newspapers. I do get a couple of trade magazines for “free” that I read with my IEEE membership. Most of the articles that I read are online.
July 14th, 2009 at 7:03 am
Are the transportation costs really that surprising? When you factor in the cost of buying a car, gas, routine maintenance (oil, tires, belts, brakes, etc) and unexpected maintenance (oil leaks, break downs, etc), insurance, taxes, licensing and fees then multiply by 1.9 (the average # of vehicles) and I think $725 is pretty good - LOL! I didn’t even factor in financing/interest costs since most people have loans on their cars. Cars are definitely a luxury!
As for reading costs - I’m not sure $118 covers delivery of my local paper each year, much less what I spend on other reading material.
I’m pretty sure the average education, apparel, and personal care costs are much higher than what we spend in those categories. And we spend nothing on tobacco despite living in the capital city of cigarette making.
July 14th, 2009 at 7:08 am
I don’t think $725/mo on transportation is necessarily out of whack. It depends. If memory serves (which it might not :)), 2007 was a pretty bad year for gas prices. For people living out in rural areas or further in the suburbs, it’s not always possible to optimize transportation in a way that makes tangible difference.
Then again, for this argument to be fully supported, I’d need to see the breakdown of location for the “consumer units”.
July 14th, 2009 at 7:12 am
I’m so sad that the average American family spends more on cigarettes than on reading. I was recently driving cross-country and spent one day (Eastern Washington and Oregon) asking in each town I stopped whether they had a book store. I asked at gas stations, rest stops and convenience stores. Generally the towns did not have book stores or the person I asked didn’t know. Only when the population of a place reached about 40,000 was it able to support a book store. One nice note, though, was that many places had used books for sale or book exchanges.
July 14th, 2009 at 7:27 am
I spent a total of 0$ on books in 2008 b/c I just go to the library 4 blocks away and check them out, and read magazines. My wife and I enjoy sitting down on the flr one lazy afternoon and thumb through mags at Barnes & Noble and Borders as well. It’s so fun, and it’s so free
In 2009, I spent $16.25 after tax on a vampire book called New Moon b/c we were on our way back from Italy, and were bored out of our mind.
Books take up a lot of space, and much of what you can read can be done so on the internet, and for free at the library.
Where I spend most of money is dining out, which can get quite expensive. I need to cut that down.
Rgds,
RB
July 14th, 2009 at 7:27 am
Call me cynical, but tobacco and alcohol seem awfully low for the average American!
July 14th, 2009 at 7:28 am
For someone who lives in WDC area the commute costs seem about right. I easily spend 150/mo just taking public transit to work. And thats only my work costs. Of course I dont drive my car as much, so my gas and normal wear and tear expenses have drastically decreased ($10 gas in the car lasts a month)Of course there is no way to account for the price difference for the areas that we live. I know living this area is far more expensive than living in a less metropolitan area.
July 14th, 2009 at 7:31 am
Regarding transportation costs, you’re right JD $725/month is expensive!
I live in a big city and have a car. My monthly gas bill is $150, my bus pass is $55 pre tax, and I guess i can add on tolls, tickets, and maintenance at $100/month…. so that total is $300.
Maybe transportation is cheaper in a big city.
Rgds,
RB
July 14th, 2009 at 7:31 am
If you are looking for regional comparisons, Mint.com (clark howard waxes their car about once a month) is a free online expense tracking site that exchanges advertisements for financial services (not in-your-face by any means) to allow you nearly real-time expense tracking, if your bank is supported. You can go to your pie chart page and click down below and compare yourself nationwide or against a number of other areas, states, and I think even cities for your spending at a particular vendor or entire category. Pretty cool stuff to compare what I spend to other people living in my area on certain items.
July 14th, 2009 at 7:43 am
Very interesting. I’m saddened that only 1% of expenditures was on education. OTOH, I’m curious about where items like child care are categorized. For those of us who have kids and work outside the home, child care makes up a significant portion of our monthly expenditures. For a while, I paid far more for childcare than for my mortgage.
And as for mortgage, it would be very, very intesting to look at how the housing portion of the expenditure changed between 1999 and 2006.
July 14th, 2009 at 7:47 am
The key point is this is a chart of averages. I think $118 is a good reflection of book spending when looking at the averages. That means spending around $20 on a book every couple months. I read a lot of info from the internet and while I like to read, I maybe spend $40/year.
Smoking surpised me until I reminded myself it’s an average. So that $338/year accounts for those of us that don’t smoke. Smoking will either be $2-3,000 or $0, depending on smoker or non-soker.
July 14th, 2009 at 7:56 am
My friends would consider me an avid reader. average 2-3 novels/month and I get all of them from the Library or yard sales. I won’t spend more than $2.00 for a book. But our newspaper subscription runs almost $80/year, so I guess that puts me right at the average.
July 14th, 2009 at 8:05 am
I spend about that or more on books, but I also spend way less on other things like going out (I don’t spend any where near the average of $275/mo on eating out - maybe $50 in a busy month - I prefer to have folks over and cook) or going to movies, clothing, etc. I was given a Kindle last year for my b-day (group gift for the “big 40″)and have found lots of classic free books to read and the $9.99 price for even the newest book actually has meant I’ve spent less this year. And, I still use the library too!
I do own a car, but it’s 6 years old and I plan to drive it a long time - nothing wrong with it. I’m lucky to be close to a bus line that takes me into the city for work, so that makes a huge difference in the associated costs of the car - in a busy month, I’ll fill up twice, but usually it’s only once, and insurance is lower since I drive less than 12,000 miles/year and it spends more time in my garage than out.
I agree, there should be a category for pets - I have cats and a dog and I spend about $200/month on them.
July 14th, 2009 at 8:10 am
Where is the slice for credit card debt payments? Or does the chart represent what went on those credit cards?
July 14th, 2009 at 8:13 am
JD,
Did you ever get into Dungeons & Dragons and all that fun stuff back in the 80’s? If so, remember books like Monsters Compendium and so forth? I remember that time when I had the book addiction, and would save for my allowance for month just so i could get one of those beautiful hardcover books. Nothing beats the fresh smell either. They still have those books in comic book stores, but now they cost $29.99 vs. $11.99.
I think it’s actually great you love comics and stuff. They are relatively cheap entertainment items, and provide a lot of pleasure. If only i could have that want back in my life. The more we enjoy, the more enjoyable life is.
Rgds
RB
July 14th, 2009 at 8:14 am
I did know that US citizens, do not spend much on holidays or vacations…
but I did not know that they are spending nothing???
It is me or the chart and nobody is missing money spend on holidays?
Best, Roman from Switzerland, in europe, the old continent.
July 14th, 2009 at 8:23 am
Mint.com has a great gadget under the Trends category… Just below the piechart is SpendSpace; you can click on any category of your spending and compare your spending to the average spending in the location of your choice.
July 14th, 2009 at 8:29 am
I bet I don’t spend all that much on books. I used to count books as one of my larger entertainment categories, but I don’t have the shelf space. If I’m not going to read a book more than one time, I’m reading it from the library. I can almost always get anything I want to read through the local University which is tied to most of the state universities and can get books in a couple of days.
The biggest reason I don’t buy books isn’t the cash so much as the shelf space. My house has 5 bookcases in it already, and each is packed. I don’t buy new books because I don’t have good places to put them.
A book I’ll read again and again? Sure, I’ll buy it, and I’ll make a space for it.
July 14th, 2009 at 8:34 am
To Michael, Post #4
I know what you mean about the computer books being expensive, I’m a computer programmer. That being the case, why not find all your resources online? There’s a plethora of free information on the web. Sometimes I can find whole ebooks for free.
July 14th, 2009 at 8:52 am
I’d be willing to bet there’s a big difference between urban and rural for the transportation costs. Since we live in a city, I take the train and DH bikes to work, so our monthly transit costs are less than $100. But we do have a car, and driving to visit family in rural areas gets pricey. I presume that living in the country can necessitate two cars for many families, with the accompanying increase in gas/insurance/maintenance costs.
As to book spending, ours is much higher than that, but we’re both grad students, so the pricey books (we buy the ones we can’t check out from a library somewhere) can go under “education” costs. The rest should go under “entertainment”, I think. $118 per year covers our magazine subscriptions. Used books and such probably account for another $100-200 annual spending for us.
We (reluctantly) spend roughly 1% of our income on clothing… I wonder what “services” includes in that category? Dry cleaning?
July 14th, 2009 at 9:05 am
There are some things that are grouped oddly. Reading the source data pets are included under entertainment (but not books). Expenditures when traveling are not included (why?). And where is retirement contributions? Is that insurance/pensions? Not clear from reading the article. Regarding the alcohol possibly tobacco as well) does look low but again this information is self-report via diary. Most people report honestly but there can be biases in self-report for areas that have value judgements (people estimate down).
July 14th, 2009 at 9:07 am
JD, to answer your question:
This past year, I spent $493 on books.
(And this was with a resolution to use the library more — like last night, wherein I checked out 5 books for the next couple of weeks).
On clothes - $368.26.
You are not alone.
Re: car costs, that seems entirely average to me. Assume a car loan of $400, insurance of $100 per month (I spend $111 per month in an urban area, with a good driving record), $200 in gas, $50 in maintenance, and you’re there. This is why car loans can be such a drag on a budget.
July 14th, 2009 at 9:08 am
I for one always wonder about healthcare. I’d like to know the real average cost of health insurance. We as a family have always had great employers but paid a lot more for health insurance than it seems most people I know. In some ways its prepared us for the “real world” but I still think a lot of people live in la la land when they are asked to pay $30 bucks more a month than the $100 or so they do pay and balk at it! Oh and while I’m at it, why is a family a family no matter how many kids you have? I resent paying the same family costs for 1 child as someone with 4 or more!
July 14th, 2009 at 9:10 am
Mint.com also has useful comparison data for some selected cities in USA.
July 14th, 2009 at 9:11 am
Interesting and weird graph. I normally roll my eyes at all the comments rushing in to tell us loudly they could “never give up boooooks” but that percentage IS really low. Especially when placed next to donations. Miscellaneous also looks insanely low to me too, especially if that’s supposed to cover travel/vacations as well as gifts and other bits and pieces. Alcohol also looks low to me.
July 14th, 2009 at 9:19 am
Education is a wierd category there, for sure. Averaged out, it’s pretty small, but most full-time students spend something like %50 on it, I’d guess (depending on programs - Law school, for example, costs more than my other expenses combined).
Also not sure if textbooks fit there or under “books”. If they fit under education, that book figure is actually high for me. I mostly use the University Library (I’d buy a lot more books if I was stuck using the public one).
July 14th, 2009 at 9:20 am
To paraphrase John Hurt in the movie The Elephant Man,
I am not a consumer unit, I am not a consumer unit, I am a human being!
July 14th, 2009 at 9:21 am
Does the transportation category include airplane tickets or are those in the vacation category? (I can’t enlarge the graphic on the work’s filter.) That might explain the high level of expense.
July 14th, 2009 at 9:28 am
I used mint and pulled up data from January 1 until today to see what we spend our money on. Besides bills like rent and utilities, our next highest expense is food and eating out.
I also love to order books through half.com. Many of them I have read at the library, so I go ahead and get my own personal copy.
July 14th, 2009 at 9:30 am
The Department of Commerce hires contractors to meet with families once each quarter.
There are supposed to be 5 interviews, each takes 1-2 hours. We were interviewed TWICE by different people - but the second interviewer had detailed information that had supposedly been gathered in prior meetings. It was all fake; we had not given that information. The contractors took our base data and added whatever they felt like.
I think the numbers are heavily skewed by the interviewers putting the answers they think are correct - making up data - which is then presented as “the economy”.
July 14th, 2009 at 9:41 am
I know I spend more on housing, including utilities and supplies, in-home food and insurance (life and health), but less in most other categories (alcohol, tobacco, clothing, transportation and education). This actually surprises me, as I live in a modest-to-nice home (no mansion), on which I put 20% down and have a relatively low interest rate and I’m fairly young and in good health. I’m curious where others are getting their insurance policies and how their housing expenses are so much lower.
I am also puzzled by the ommissions on this list. Where are vacations? Where are pets? Where are children’s college contributions (or is that education)? Where are debt repayments (credit cards and loans)? Where are holiday and birthday gifts for friends and family (or is that miscellaneous)? Does anyone have any thoughts? It would certainly be helpful to have definitions for each of these categories.
July 14th, 2009 at 9:43 am
I don’t spend much money on books (unless you count college textbooks, then we probably spend about that much, but buy used/International editions)–we buy travel books when we go on vacation (think Lonely Planet), as well as cheap paperbacks from Half Price Books. My last trip, I bought 3 books for less than $4. We are both grad students and have good access to library reading material, as well as less fun reading material, and not tons of free time to use up. Excluding college texts, I would say that we probably spend ~50-75$ on books per year.
July 14th, 2009 at 10:03 am
I don’t think tax is included ’cause the government is too embarrassed to say they took most of your money for the year. For most people, the largest expense is taxes. That does not only mean income tax. There’s also sales tax, property tax, gift tax and inheritance tax.
July 14th, 2009 at 10:06 am
I don’t track my book spending separately… But if I take the last few weeks as average, I would estimate about $1,000 a year. That’s a good chunk out of a household income of $30,000 or so. But… I spend about $20/year on clothes (all second-hand) and maybe $20/year on alcohol (just on holidays), with no tobacco use anymore. I guess I justify it cause I read so much, about a book a day. And the library is bad for absent-minded people with a lot of books, like me, cause I always keep them past their due date and end up with a ton of fines. And I get back a couple hundred dollars each year by selling a few hundred books; I obviously can’t keep them all!
July 14th, 2009 at 10:08 am
I suspect I’m on the far end of the bell curve when it comes to books, and I’ve even been buying fewer in the past few years.
I’m a university librarian, so I have easy access to ILL and use that to get books that I’m not sure of, or that I know I’ll only read once. But I do buy books that I know I’ll read multiple times, that I use for reference and instruction for my art, and for books that I want to send a message to the publisher about - to let them know there’s a market for them so they will publish more books like this (I also recommend them for purchase at my local library).
Which brings another thought to mind - does the “books” category count books purchased as reference, or just for entertainment reading?
July 14th, 2009 at 10:16 am
$700/month on travel is NOT outrageous. My wife and I do not fly, but we own two cars; one car has an auto-loan, so that’s a couple hundred a month right there. Thanks to the recession I now work even farther away than six months ago, so I’m easily spending $75-$100/week on gas. It adds up fast!
July 14th, 2009 at 10:19 am
Mint offers the ability to compare your spending habits to people in a certain location. So you could see how your spending stacks up against others in your area, or a different city if you’re thinking of moving.
I’ve never used it, because I’m not worried about what everyone else is spending, only what I’m spending.
July 14th, 2009 at 10:26 am
I’m one of the people skewing the “reading” costs downwards… I read non-stop as a kid/teen, devouring several books a week, every week, all year. I used the library a lot, but also bought a lot of paperbacks… I had hundreds by the time I left for college. But then I completely stopped reading for fun. I might buy 2-3 books a year now, always nonfiction. My appetite for reading stories and learning new things is generally sated by browsing the web (I read a lot of news), which is easier to “put down” or enjoy in small chunks than a book (which will make me quite anti-social for the day or so it takes me to read it!).
July 14th, 2009 at 11:04 am
$448.76 from June 2008 - June 2009 AND we use the library heavily. To be honest, I know I spent more than that, because I also ordered from Amazon and half.com, and wasn’t in the habit of always breaking out things I paid with my Discover (cash back) card.
July 14th, 2009 at 11:09 am
I read a lot of books, but my spending is pretty low. I use the library and buy at used book sales or thrift stores. I go to a large used book sale semi-annually and spend about $30, at 50 cents a book.
July 14th, 2009 at 11:16 am
The numbers presented are the AVERAGE and are NOT what typical people spend. The average will be skewed high by the high income people. To get a better idea of what people spend look at the full report and dig into the income quintiles. So if you want to know what middle class people spend look at the 3rd (middle) quintile. Spending for the middle is 10-20% less than the average figures. e.g. the middle spends about $7900 on transportation while the average spends about $8700.
The consumer expenditure survey DOES track spending on taxes, pets, interest and vacations. That data is available on the BLS site, but just not presented explicitly in this chart. e.g. average property taxes were $1709 and federal income taxes were $1569 in 2007. Or for middle 20% they were $1255 in property taxes and $598 in federal taxes.
Pets are a subcategory of entertainment.
Interest payments for homes is part of housing, interest on cars is part of transportation and the miscellaneous category includes other finance charges.
Trips/vacations is harder to see. I think its mixed in with the other categories mostly. Food is in eating out. Airline tickets are part of public transportation. But they do have data on the actual amount spent on trips also, I see reference to it as a separate category in the CES anthology for 2008.
July 14th, 2009 at 11:22 am
$13,000 or so in taxes is probably about right for the income and family size stated.
Books? I used to spend a lot on technical books, but since I reviewed so many I now get them free from publishers. Our family also trades books back and forth, so my costs for a large amount of reading are pretty low.
Whatever I do buy, I buy used if it’s at all possible.
July 14th, 2009 at 11:25 am
I spent $100 on books in 2008. That’s less than the “average” but I’m pretty sure I read more than the average person. I use the library and trade books on http://www.bookmooch.com where books end up costing me about $2.40 each.
I’m horrified, but not really surprised to see that I spend as much on food for myself as a whole family. Still working on how to cook for one.
The chart doesn’t include vacations. My budget rolls vacations (including little weekends away) into leisure and I find I spend about 2x what the average unit does.
I spend much less on transportation. Gas is about 2/3 of what they say. Maintainace costs about 1/3 of what they say (I’m so glad I invested in a reliable car) and my car is paid for.
My income and housing costs are pretty similar to the given unit.
July 14th, 2009 at 12:01 pm
Wow. I’m amazed how much money people spend. In our two person household, our monthly food budget is $300. That is for meals at home and eating out. Our entertainment budget is $75 a month, less than half what the average household spends.
I think it’s odd that they don’t track savings or taxes. Maybe when they do, they find that people are spending more than they make so they decided to leave the extra $13K as a mystery. I figure about $9,550 would go to Federal and State taxes (7.65% Social Security and Medicare tax, 5% effective rate for federal income tax at that earning level and 2.5% effective rate for state).
July 14th, 2009 at 12:14 pm
if i had to guess, the $725/month includes the cost of an automobile purchase depreciated over it’s useful life, or the rental cost if it is leased. but that’s just a guess.
July 14th, 2009 at 12:21 pm
For some categories such as tobacco, people either spend in that category or they don’t. That means instead of an average of 0.7% on tobacco, some people are spending $0 and others are spending $1000. A smoker would like to know how much other smokers spend on smoking, not how much the nation spends on average.
July 14th, 2009 at 12:23 pm
Mint.com provides the ability to compare your spending with those in various states/cities or to America as a whole. I’m pretty sure the data is only comprised of other Mint users though - not the actual average American.
Still, it’s probably a better pool (and the data is local). Who wants to be compared to the average American - who doesn’t save and has no retirement fund and earns less than $40K a year?
July 14th, 2009 at 12:25 pm
Think I left this post previously on the wrong site.
What exactly is covered in “household operations” category? Anybody know?
July 14th, 2009 at 12:46 pm
Wow. Just as much spent on Dining Out (not food, just dining out) as on healthcare. Wow. I need to find better benefits…
July 14th, 2009 at 1:08 pm
I found the breakdowns by income level, size of family, renter v homeowner, urban v rural, education level, etc., at the end of the source material fascinating.
Books are a great example. Less than a high school education — $40 on books. Masters or above — $260 on books.
I probably spend around $500/year on books and magazines (1 subscription plus a handful from the store for trips). Plus I go to the library about once a month and get 3-4 books at a time.
July 14th, 2009 at 1:25 pm
I used to spend over $200. a year on books. Now I belong to paperbackswap.com and get all my books from there for just the cost of shipping my old unwanted books to others. I have a huge library of books now and usually get whatever book I want by adding it to my wish list.
July 14th, 2009 at 1:52 pm
I spend a fortune on childcare—right up there with the mortgage, but my transportation and housing costs are very low because of where I live.
I also spend lots on books (for me and the kids), and at least $1000/yr on my gardening obsession (not veggies–I’m landscaping my yard myself and I looove flowers and bulbs).
I spend about $1000/yr on skincare products, which I’m embarrassed about. But Oil of Olay doesn’t do it anymore at my age!
July 14th, 2009 at 1:52 pm
I agree with Kristin (#57). It is hard to get a handle on these data, since they don’t come out and say if this is pretax dollars, then what are the taxes, the health insurance, the contributions to retirement. Why are not payments for health insurance not included in medical costs? For example I can’t even tell from this graphic whether the average American spends more than they earn. It’s also difficult because some of the categories are not how I would intuitively group. Simple questions: is a vacumn cleaner in household maintenance or miscellaneous? Is the cost of a vehicle prorated over it’s lifespan or only counted when it is being paid off? As other mention the small categories are not true averages because they often all or nothing. The only thing I can tell is that that our household spends significantly less on housing, and significantly more on food/eating out. Is that good or bad? I don’t know.
July 14th, 2009 at 2:19 pm
I used to spend a ton on books, one of my favorite pastimes, but during our 2007 debt paydown project I weaned myself off of Amazon and now get most of my books from my local library. I still buy a few books from Amazon and if I’m in a Target or K-Mart (which is rare) I generally end up leaving with a book.
I hit the library just about every week and pick a couple of books and always keep book lists in my purse to help me find titles (NYT times best books from 2008, best books of all times, best books from the 20th century, etc.)
July 14th, 2009 at 2:24 pm
The chart states that the income is before taxes. I assumed that 401K contributions and health insurance was captured in the insurance/pension category.
July 14th, 2009 at 2:46 pm
I am not really amazed at how much the “average” family spends per month eating out, but it reinforces why our family of three eats at home as much as possible. We live on one income and spend about $300 a month on food that we cook at home, and we are lucky enough that my mother-in law comes over every two to three weeks and gives us $30 so my husband and I can enjoy dinner while she watches our daughter. Other than that, our only meals out are when we are traveling.
July 14th, 2009 at 2:57 pm
Half of my monthly income of around $800 goes towards rent ($400 for a room). About $100-$150 is spent on food/toiletries a month. $38 for cell phone (it’s the cheapest cell plan, but after taxes, ick!), don’t have a land line. $38 for water (I pay the water, and my roommate pays the electricity & internet). $50 a month for gas (I don’t travel much). Car insurance and renter’s insurance is another $80 a month. $20 a month for my medication. Whatever little is left over, I try to save. Not much left for books/fun/vacation. If I get a little extra from my freelancing that isn’t put back into the business, I usually try to save it in my emergency fund. (As for reading, I usually enjoy reading stuff for free on the internet, and often look for new reading materials, which is how I found this blog!)
July 14th, 2009 at 3:20 pm
Karen has an interesting point about the skin care
I’d love to see this data broken down by male/female. I guess “consumer unit” means heterosexual marriage, but as a single girl my expenses are probably pretty different than a single guy. (Or at least one that doesn’t wear dresses, make-up or bras).
July 14th, 2009 at 3:53 pm
Regarding books, to compare 2007 with the first six months of 2009. According to my mostly accurate spreadsheets from ‘07 I spent $890 on books (please hold one moment while I kick myself). In ‘09, thru six months, that amount is $124. Part of this drop is, I’m too damn busy. Three babies, full time job, two additional rental units and aspirations of a writing career. The other part is that I am trying to make a more conscious effort to unplug from media. In reality, I’ve probably replaced my book reading with blog reading. While cheaper, it still doesn’t have the desired affect of tuning out and letting your accumulated knowledge ferment (and hopefully gel).
Take my netbook, please…
Namaste
July 14th, 2009 at 4:10 pm
Please disregard the income tax figures I gave before. The numbers I cited above on federal income taxes can’t be right. Those numbers are too low. Average effective tax rate for federal is about 12-13% range. I must have misunderstood what the BLS site meant. Maybe the numbers I cited are income from peoples tax returns? I dunno.
July 14th, 2009 at 4:49 pm
I like some of you also question the accuracy of the data the graphic represents. It’s still a pretty cool graphic and it’s useful to see what the average American spends their money on.
-Gen Y Investor
July 14th, 2009 at 4:57 pm
I live in Solo, Indonesia.
Unfortunately there is no public library here.
There are places to rent books, but they mostly carry magazines and comic books. You can rent one comic book for 10-20 cents per day.
I spent around US300 in the last 12 months to buy personal development, personal finance books.
One of my goal is to set up something like a public library here where people can read more quality books…does anyone has an idea how to do this?
Learn and grow!
July 14th, 2009 at 5:39 pm
Hey! I love my public library.
It’s easy to when you don’t have any space for purchased books.
July 14th, 2009 at 5:43 pm
My spending doesn’t really jive with the chart, but that’s because I don’t necessarily have ‘average’ priorities. My housing costs are only about 17% of my net income. I have a car payment that’s over $700/month, and that doesn’t even include gas or insurance. Up until moving last week, I had a $150/month bill for bridge tolls just driving to work. Total transportation costs for my wife and I are easily over $1000/month. I haven’t been keeping very close track of categorical spending lately, but I’d imagine we spend more on food than average (we go out to relatively expensive restaurants fairly often), and more on travel, but probably less on “entertainment” (it seems to not include eating out nor travel) or clothing.
It’s a lot easier to splurge on things like eating out when you’re content to live in a one-bedroom house for half the price that other people are paying for bigger places. We live in a fantastic location — we’re one block from the beach in a California beach/college town. That matters a lot more to me than buying a den, or an extra bedroom, or a room dedicated to a television, so we forgo those things and save on housing costs.
I spend nearly nothing on books. I probably buy a couple novels a year, and almost no non-fiction. Almost all of that reading (and it is a *lot* of reading) has moved online. For many subjects it’s a lot easier to find up-to-date “how to” type information online than it is to go to a bookstore, and I read a lot of this.
July 14th, 2009 at 6:19 pm
$118 in books? Not me, I might end up spending $1000 over the next 12 months, that amount doesn’t include my books for college classes
It’s amazing how much time there is too read when there is no TV around.
July 14th, 2009 at 6:55 pm
Hmm very interesting! I’d love to know how that’s changed now.
Regarding the non-US articles, I wouldn’t ever expect you to write those, they’re not your area of expertise. But a lot of your advice regarding IRAs, insurance, bank accounts is purely US centric, so I’d like to see more *general* information, or have it spelled out that they are based on US details to remind us. And if you could point us towards finding non-US blogs that have similar information to yours that would be brilliant too.
July 14th, 2009 at 7:10 pm
They don’t display taxes for the same reason taxes are deducted from your paycheck. If you could easily see how much you were paying the government, even our dumbest citizens might figure out they are being robbed.
July 14th, 2009 at 7:40 pm
One way I have been able to reduce my amount of frivolous spending is by getting rid of my ATM card. I wrote a post about this and am in the middle of an experiment to see how much money I can save by not carrying it around.
There have been numerous times where I wanted to buy a cup of coffee or get a bite to eat while I was on my way to work (even though I brought a lunch with me and my employer offers free coffee). I am just ‘weening’ myself off the card now, as I don’t feel the urge to spend anymore.
I can’t wait to find out how much I have saved after a month has gone by. I am three weeks into it now and already saved over $100.
July 14th, 2009 at 7:40 pm
My car runs me about $3000 a year, not counting the actual cost of the car, which at this point averages out to a little over $900 per year. When the car was newer, I spent more on insurance and less on repairs, but as I recall it was about the same overall. It’s more than I spend on vacation or groceries, less than on utilities or recreation. I really don’t spend much on books, because I already have so many (and I use the library).
July 14th, 2009 at 8:50 pm
It’s not too difficult to see why average transportation costs were about $8750. I think most people are only thinking about gas and repairs. But the graph actually breaks down the cost into 3 parts: gas/oil - $2384; expenses/other transportation - $3130; vehicle purchases - $3244. The graph also indicates the average family had 2 cars.
So the fact that yearly depreciation on 2 cars is $3244 is actually quite reasonable. Or if you find the depreciation concept too abstract, then just consider that if (for example) the “average family” buys a new vehicle for $15K and hangs onto it for 10 years before junking it, then you get roughly the same numbers with a large sample size. (i.e. every 5 years the average family purchases a new car for $15K, so the average outlay across families per year would be $3K)
I would guess $500 - $750 per vehicle in repairs is about normal, so that leaves an extra $1500 to $2000 unaccounted for in other transportation expenses. Airline tickets for the whole family once or twice per year will take a good chunk of that, plus keep in mind that a lot of people have significant parking and/or public transportation expenses. Here in the Northeast Corridor, spending $100/month on parking for your job is not at all unreasonable, or if you prefer not to park downtown you can take public transit, but that will cost you roughly the same.
July 14th, 2009 at 9:52 pm
Since you’re asking…
I just started budgeting so I can’t look back and get an actual annual amount spent on books. But I’m guessing it’d be $800-$1200 for our 2.0 person consumer unit.
Looking forward to reading all the comments more closely. Since I’m just starting to budget (to see where all the money goes…because it sure goes) I always like to hear what others allocate.
July 14th, 2009 at 10:44 pm
Information like this I always take with a grain of salt. My reasoning is that one never knows the accuracy of the data collected. The main question I have is how accurate were the spending figures given by the sample polulation polled.
If the majority of the population keep accurate records of their expenditure and the minority go from their perception of spending then the data is better than vice versa.
As shown by the diversity of expenditure figures in different categories given by previous commenters, the value of a chart like this is that it’s a great conversation starter.
Cheers
July 15th, 2009 at 4:03 am
I spend significantly less on transportation, insurance, and healthcare (even paying out of pocket and with medication I take forever). However, I spent quite a bit more on alcohol, food away from home, books, and education.
Of course, I’m also a young person, single, and a student.
My housing costs are right on, though, because I own. Seems smart when you’re young, but it’s really not.
July 15th, 2009 at 6:22 am
Rob Gerlsbeck just posted on Canadian figures (probably after seeing this post):
http://blog.moneysense.ca/rob-gerlsbeck/where-your-money-went/
July 15th, 2009 at 8:53 am
There have been a number of grumpy posts about taxes. I don’t begrudge my tax expenditures (well, maybe the part that goes to the war in Irag). In the US we are taxed less than most other countries, and yet we get a lot — transportation costs would be a lot more if we had to pay directly for transportation infrastructure, if there wasn’t Social Security, how much more would we all be spending to support our grandparents, or relatives with disabilities, if it weren’t for taxes, how much more would we be spending to insure ourselves against fire, or to protect ourselves against crime, or… well I could go on but I won’t.
Final note — unless we “get VERY rich slowly” we won’t be affected by the inheritance tax (well, if you’re dead, I’d argue you aren’t affected anyway!) and few of us will be affected by the gift tax, either.
July 15th, 2009 at 11:06 am
That is a great chart from Visual Economics. Thanks for sharing!
July 15th, 2009 at 1:21 pm
Wow. I am impressed by how much the average American donates - 3.7% of spending!
I guess I shouldn’t be surprised by the differences. I am a single New Yorker, so I spend a tiny fraction on transport (about $100/month) and waayyy more on alcohol and “personal care.”
Re: books, I use my library a lot, but including gifts for others I easily spend $1,200/year on books.
July 15th, 2009 at 2:45 pm
Well, my “shelter” category is about double in price - it’s impossible to get away with an $800/mo mortgage or rent where I live. It’s only marginally higher percentage of my gross income, though (21.2).
I’ve only been tracking my spending accurately for a few months, but at the current rate I’m going, I expect to have spent about 60% of my income in these categories (compared to the chart’s 79%). I hope to either invest the rest or set it aside to purchase a home…
which brings me to a question I have that for you, JD. How does something like purchasing a home fit in with a savings plan? What are the different opinions on this–yours, the experts, the readers?
July 15th, 2009 at 8:53 pm
I am in CA where the cost of living is high with housing, gas, food, etc. I pay so much in taxes that I can’t afford splurges on any books, eating out, or even fancy meals at home. It is back to the basics here as we are crushed with taxes. My household doesn’t look anything like this wheel.
July 16th, 2009 at 10:46 am
I spend more in some categories and less in others. For instance, I have spent about $750 on my daughter’s clothing so far this year. Could I spend less? Yes. Do I want to? No. I can afford to do so and enjoy putting her in cute clothes. Total amount of money I spent on my own clothing: $50. I spend about $40 a year on newspaper subscription but I get all my books from the library so no expenditures there.
Our mortgage is much higher than the average american’s but we also live in a higher cost of living area. Our total earnings before taxes is at least 3 times higher than the average so it is understandable that some of our expenditures are higher.
I am just surprised that some of the things are lower such as we spend less on healthcare, housekeeping supplies, and education.
We don’t purchase alcohol or tobacco, either.
July 16th, 2009 at 12:13 pm
Inge - For starting a library, why not start with a kind of book exchange or co-op? A gas station in one of the small towns I drove through had one bookcase of used books for sale and another set-up as a book exchange (take a book, leave another). For the co-op, people could contribute books or cash and collectively decide what types of books to purchase. It would get readers involved from the beginning and you’d have a group to help manage it. Members could exchange books for free, non-members could rent books. If it was successful, you could grow it into a real library.
July 16th, 2009 at 1:27 pm
The most striking thing for me about the data is that if you take 25% of the gross salary out for taxes (I don’t know what the tax brackets are, and I’ll grant you that the family may reduce their tax liability through retirement contributions etc.), then the post-tax income is $47,318. So if the average family was spending $49,638 then the average family was OVERSPENDING its income by $2,320 PER YEAR. As many people have noted these numbers may not be entirely reliable, but since neither “pets” nor “childcare” appear as line items, I wouldn’t be surprised if the average family was indeed overspending.
July 16th, 2009 at 4:12 pm
These are of course averages, but if you look at just two expenses, housing and transportation, combined they account for 51.7% of the total. That may explain why we sometimes feel poor, so much is going to pay for what we think of as “basics”.
The healthcare portion looks out of whack. $2853 is only about 4% of total income, yet on a national level, we’re spending about 16%. Who’s paying for the difference???
It’s not in Insurance/Pensions, because nearly all of that is subclassified as social security and pensions, and not insurance. Is it possible that far more people are uninsured than we think?
July 17th, 2009 at 1:31 am
I’m French and live in Canada right now, so it’s probably not surprising that my habits are so different from the average American (plus, readers of this blog aren’t “average Americans” anyways)
First, transportation and apparel. I don’t own a car, neither does my husband (neither of us even have a license) and walk as much as is possible (whenever it takes 30 minutes or less to walk somewhere, and occasionally when it takes longer).
We don’t even have bus passes because even that would cost more than paying for individual tickets. Our average monthly expense for transportation is probably 10-20 dollars.
Apparel now. I just got new shoes. Running shoes, that is. My previous running shoes were bought in 2003, and I would have kept them if I hadn’t moved from France had had to leave a lot behind. (To be fair, they were really falling apart. I glued the sole back on a few times).
I own three pairs: a pair of running shoes, a pair of winter boots (Canada…) and a pair of sandals.
Shoes usually last me between two (sandals) and five (running) years (I don’t know for the winter boots. I only used them for one winter, so they’re good as new, really. They might last ten years or more).
I own two pairs of pants, both more than five year old.
And I could go on.
In other words, my apparel expenses aren’t really measurable in a monthly way, more of a yearly way. And even then, I don’t buy clothes every year.
However, I do spend money on graphic novels and videogames pretty much ever month. I do buy many books, even if I try to borrow them from the library as much as possible. My “entertainment” category, although smaller than the average American, is definitely bigger than transport or apparel.
Electronics would also be a “big” one. I do own a mp3 player, a laptop, and just bought a (refurbished) desktop. I also own several consoles, although I’ve never replaced any of them so they’re a one-time expense.
My TV in France was older than me (to be fair, I’m only 24), and we’re being given one here so no expense there either.
I could go on but I’ve been long enough as it is. I’ll just add that I have no insurance whatsoever. Of course, I’m French and live in Canada, both countries having universal health care. I don’t have a car. I don’t own a house. I’m young, without dependents and therefore have no death insurance yet. In my case, it makes sense, I think.
July 17th, 2009 at 6:07 am
As a Reply to #44, the Department of Labor’s interviewers do not skew results of interviews. When you deal with hundreds of thousands of data points, there will be some random errors (mainly human) where data got mixed up. In the aggregate, these will not have an impact. It is wrong to assume that there is something sinister going on or that the data is unreliable or tampered with. It’s just random error and I’m sorry that it happened with you, but those things do happen in very large surveys
JH
US Gov’t Economist
July 17th, 2009 at 9:00 am
Jericho Hill (#99)–You’re probaly right about this. The seeming “weirdness” of some of the numbers have more to do with taking very large aggregate numbers then trying to fit those numbers into a fixed number of households. That’s bound to create some numbers that just don’t look right, but manipulation isn’t likely to be the source.