The Spending Habits of the Average American
Published on - July 14th, 2009 (Modified on - December 1st, 2011) (by J.D. Roth) 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?)
Lastly be aware of your spending habits that will help you be on your toe before taking any financial decision just by checking your credit report.More info how to get a free credit report?
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I thought the transportation was high too..almost $800? Thats out of control. That’s rent money in a lot of areas. Also-60% of your money allows you to eat at home home vs 40% take out dinners-that just says something about America.
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I hope that we learn to control our spending habits because this cannot continue indefinately. Perhaps some discipline would help keep things under control. I can’t remember when was the last time I heard the government ask individuals to be careful with their spending!
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This data was really helpful as the result of a disagreement with my local bookstore wherein they referred to me as a non-paying customer. I added up the numbers from my preferred customer information and spent over 900 dollars on books, magazines and hot beverages in their store. It turns out that their non-paying customer is spending 9 times the national average in their store.
One wonders how much one need spend to be considered a paying customer.
Thanks for this data it will be very helpful in my letter to their corporate offices about their ridiculous customer service.
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Let’s see: Take the money from tobacco, add 90% of the average money spend on alcohol and now you get approximately what I spend on books during the year.
Yes, I do buy some books second hand but I like to buy others new as well, because you do not get everything you want as a used book. A library is difficult for me due to their opening hours being similar to my working hours.
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The idea is to take each category and work towards zero or less. With food for instance Zero is easy on eating out. To get below zero on grocery’s — First, don’t show income, instead have your employer pay your corporation. Then the money stays in the corporate account and never is income to you. This will qualify your family for food stamps and probably state health insurance as well.
Second, grow 10,000 square foot of a variety and various timed (from seed) produce. That should yield about 1,500 pounds of food. (3 pounds per day) Sell some, can some, eat some.
Third, hunt and trot fish – not for sport dummy for food. Keep the equipment to a minimum and go for poundage. Trap, shoot squirls, deer etc.
You will have lots of extra food stamp credits on your card. You can use those to buy cheese, sausage, tuna etc which you will sell along side your produce.
This method means that what may have been a $600 expense is now a $200 income and you will be reaping taxes instead of paying them.
That will mean you have saved close to $10,000 a year!
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In my household there are 3 related adults, 2 are earners. We have four cars (3 are brand new luxury). I thought we were a little better off than average, but I’m starting to realize that our spending habits are outrageous. We spend about $17,000 a year on cars (not including inspections, insurance, tolls, or gas), $600 on reading, $20,000 on apparel and services, $15,000 on food (we only eat out or get take out), $50,000 on housing. I know our average annual expenditures are well over $140,000. We’ve cut back drastically since the 90s (a lot less traveling, jewelry, parties, and entertainment). At that time, I was also in a private school with an annual tuition of $30,000 and taking private music lessons. For the last ten years, we’ve managed to save $70,000 a year. We give up the same amount to taxes each year!
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