The average American family spends roughly 90 percent of its annual income on housing, transportation, food and other items. More than 60 percent of families own their homes, and the average home has 2.5 residents.Continue Reading
American families spend 34 percent of their income on housing, 17 percent on food, 12 percent on transportation, 10 percent on insurance and pensions, 7 percent on medical care and the remaining 20 percent on other items.
Housing expenses include rent or mortgage, basic utilities, public services, cleaning supplies, equipment and furnishings. Transportation includes car payments, auto insurance, fuel and public transportation. Food costs include both groceries and dining out. Insurance and pensions include life and health insurance and savings for the future.
Families spend 5 percent on entertainment, 4 percent on apparel, 4 percent on cash contributions, just under 4 percent on miscellaneous items, 2 percent on education and 1 percent for personal items including tobacco and alcohol.
The above figures don't include tax payments or high-interest credit-card loans. The average family has credit-card debt of more than 10 percent of its annual income.
Spending varies by ethnicity. The Consumer Expenditure Survey measures how consumers allocate their spending among the various components of total expenditures. Hispanic consumer units allocated more money to transportation and food than the non-Hispanic groups. Black, non-Hispanic CUs allocated more money to housing than any other group, and white, non-Hispanic CUs allocated more money to health care and entertainment than other CUs.Learn more about Household Budgets
Setting up a household budget involves gathering information about the family's income and expenses and then entering the information in a printed ledger, electronic spreadsheet or budget software application, according to Mint. People should use a budget to evaluate spending, set goals and track spending, advises CNN Money.Full Answer >
Some of the basic rules to keep in mind when devising a family budget include spending less than the income, using cash instead of credit cards, prioritizing, saving a given amount and tracking all expenses, as stated on CNN Money. Making a budget may seem tedious and time consuming but in the long run it is able to ensure family relationships are not strained and that no member feels left out in terms of their personal needs.Full Answer >
Creating a family budget begins with making time to review income and expenses and setting goals that will guide the family's use of money, according to Mint. Examples of budgeting goals suggested by Mint and Bank of America include paying off debt and saving for college or expensive gifts.Full Answer >
Although each household's expenses vary, some common items to include in a monthly expense spreadsheet include housing costs, groceries, utilities, debt payments, childcare, health care, transportation, entertainment and other recurring costs, such as those for subscriptions and fees for services. Monthly savings and business expenses should also be included in the spreadsheet, if applicable. Spreadsheet templates are available on banking, financial management and business websites.Full Answer >