Key household budget statistics
The average household earned $101,805 in 2023 before taxes and spent $77,280, according to a survey by the most recent Consumer Expenditure Survey. The report, published by the U.S. Bureau of Labor Statistics (BLS), lists the average amount spent in various categories.
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. Let's take a closer look at each category.
A single person household spends an average of $4,641 on monthly expenses. Married couples without kids spend an average of $7,390 on monthly expenses. A family of four spends an average of $8,450–9,817 on monthly expenses (depending on kids' ages).
Setting budget percentages
That rule suggests you should spend 50% of your after-tax pay on needs, 30% on wants, and 20% on savings and paying off debt. While this may work for some, it's often better to start with a more detailed categorizing of expenses to get a better handle on your spending.
If you have a large amount of debt that you need to pay off, you can modify your percentage-based budget and follow the 60/20/20 rule. Put 60% of your income towards your needs (including debts), 20% towards your wants, and 20% towards your savings.
Housing is by far the largest expense for Americans. Monthly housing expenses in 2023 averaged $2,120, a 5% increase from 2022. Over the course of 2023, Americans spent $25,436 on housing on average.
A $100,000 salary is considered good in most parts of the country, and can cover typical expenses, pay down debt, build savings, and allow for entertainment and hobbies. According to the U.S. Census, only 15.3% of American households make more than $100,000 annually.
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.
Ideally, you want to have 20% of your take-home pay left over after paying all of your bills.
It is recommended that you spend 30% of your monthly income on rent at maximum, and to consider all the factors involved in your budget, including additional rental costs like renters insurance or your initial security deposit.
We like the 50/30/20 budget as a place to start. It splits your income three ways: 50% toward needs, such as groceries, housing, basic utilities, transportation, insurance, child care and minimum loan payments. 30% toward wants, such as travel, gifts and meals out.
Yahoo Finance
So, just how much more is the average American spending? According to the U.S. Bureau of Labor Statistics (BLS), the average monthly expenses for an American household in 2023 were about $6,440, which equates to about $77,280 per year. This represents a 5.9% increase from 2022.
Totally depends on the lifestyle you want to lead. If every kid has their own bedroom, their own car at 16, a college fund, you'll want to be making a household income of at least $180k in today's dollars.
Housing and utilities standards include mortgage or rent, property taxes, interest, insurance, maintenance, repairs, gas, electric, water, heating oil, garbage collection, residential telephone service, cell phone service, cable television, and Internet service.
We recommend the 50/30/20 system, which splits your income across three major categories: 50% goes to necessities, 30% to wants and 20% to savings and debt repayment.
Average Expenses for a Family of Four
According to the most recent data, U.S. households that consist of four people spent an average of $8,640 per month in 2022. In 2021, the average four-person household spent $7749 per month. This works out to average annual expenditures of $101,514 in 2022, up from $92,989 in 2021.
Middle-income households – those with an income that is two-thirds to double the U.S. median household income – had incomes ranging from about $56,600 to $169,800 in 2022. Lower-income households had incomes less than $56,600, and upper-income households had incomes greater than $169,800.
The formula is really simple: Monthly income minus monthly expenses = zero. If your monthly income is $5,000, you list $5,000 in expenses. If there is $200 left after listing expenses, find a place for it so your bottom line reads zero.
Gross income is vital for determining earning potential and setting financial goals. Net income, on the other hand, is crucial for budgeting and savings, as it reflects the actual amount of money available after deductions. Understanding both helps in effective financial planning.
Some experts suggest the magic number is 10% of your monthly income, after taxes. I think the right amount should be somewhere in the range of 5-10% per month. Under this fun money umbrella are trips to the bar, the movies, weekend road trips, spa days, etc.