Major expenditure categories are healthcare, Social Security, and defense; income and payroll taxes are the primary revenue sources.
About 45 percent of FY 2022 discretionary spending went towards national defense, and most of the rest went for domestic programs, including transportation, education and training, veterans' benefits, income security, and health care (figure 4).
Average monthly spending on housing: $2,120 (5% increase)
Housing is by far the largest expense for Americans. Monthly housing expenses in 2023 averaged $2,120, a 5% increase from 2022.
The three biggest budget items for the average U.S. household are food, transportation, and housing. Focusing your efforts to reduce spending in these three major budget categories can make the biggest dent in your budget, grow your gap, and free up additional money for you to us to tackle debt or start investing.
Those will become part of your budget. The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.
In 2024 the federal government spent $6.75 trillion, with the majority spent on Social Security.
Also known as entitlement spending, in US fiscal policy, mandatory spending is government spending on certain programs that are required by law. Congress established mandatory programs under authorization laws. Congress legislates spending for mandatory programs outside of the annual appropriations bill process.
Most of the government's federal income tax revenue comes from the nation's top income earners. In 2021, the top 5% of earners — people with incomes $252,840 and above — collectively paid over $1.4 trillion in income taxes, or about 66% of the national total.
In the United States, individual income taxes (federal, state, and local) were the primary source of tax revenue in 2022, at 45.3 percent of total tax revenue.
Reducing improper payments by $50 billion: Each year, the Federal Government wastes billions of American taxpayers' dollars on improper payments to individuals, organizations, and contractors.
The US government spends more money on healthcare than the on military. Its roughly 18% on healthcare and 3.5% on military of its GDP.
In December 2021, debt held by the public was estimated at 96.19% of GDP, and approximately 33% of this public debt was owned by foreigners (government and private). The United States has the largest external debt in the world.
Consumption expenditure by households is the largest component of GDP, accounting for more than two-thirds of the GDP in any year.
Discretionary spending is split into defense and nondefense spending. Defense spending is the largest single category of discretionary spending, totaling $806 billion in fiscal year 2023.
Individual income taxes are the largest single source of federal revenues, constituting around one-half of all receipts. As a percentage of GDP, individual income taxes have ranged from 6 to 10 percent over the past 50 years, averaging around 8 percent of GDP.
What do state and local governments spend money on? State and local governments spend most of their resources on education and health care programs. In 2021, about one-third of state and local spending went toward combined elementary and secondary education (21 percent) and higher education (8 percent).
The primary sources of revenue for the U.S. government are individual and corporate taxes, and taxes that are dedicated to funding Social Security and Medicare. This revenue is used to fund a variety of goods, programs, and services to support the American public and pay interest incurred from borrowing.
Mandatory outlays by the federal government totaled $4.1 trillion in 2022; nearly half was for Social Security and Medicare. The largest increases over the past 20 years have been for the major health care programs and student loans.
As such, while state and local governments spent $2,597 per capita nationally on public welfare in 2021, per capita spending ranged from $1,062 in Connecticut to $4,249 in New York. The District of Columbia's per capita spending was $7,045.
While this figure can vary based on factors such as location, family size, and lifestyle preferences, a common range for a good monthly salary is between $6,000 and $8,333 for individuals.
Quick Take: The 75/15/10 Budgeting Rule
The 75/15/10 rule is a simple way to budget and allocate your paycheck. This is when you divert 75% of your income to needs such as everyday expenses, 15% to long-term investing and 10% for short-term savings. It's all about creating a balanced and practical plan for your money.
At least 20% of your income should go towards savings. Meanwhile, another 50% (maximum) should go toward necessities, while 30% goes toward discretionary items. This is called the 50/30/20 rule of thumb, and it provides a quick and easy way for you to budget your money.