The Bottom Line
The Big 3, food, transportation, and housing, are the big-ticket expenses making up the majority of your spending.
Housing: Rent or mortgage payments, property taxes, and maintenance. Utilities: Electricity, water, gas, internet, and phone bills. Food: Groceries and dining out. Transportation: Car payments, fuel, insurance, public transport costs. Healthcare: Insurance premiums, out-of-pocket expenses.
Sound money is money that is not prone to sudden appreciation or depreciation in purchasing power over the long term, aided by self-correcting mechanisms inherent in a free-market system. The foregoing definition presents several implications about how we view sound money and how we should approach money in general.
Many Americans spend a sizable amount of their income to keep a roof over their heads, food on the table and a means of transportation. Other items commonly found in household budgets include education, child care, health care, retirement savings and entertainment.
Overall, housing accounted for the largest share of total expenditures (32.9 percent), followed by transportation (17.0 percent), food (12.9 percent), personal insurance and pensions (12.4 percent), healthcare (8.0 percent), and entertainment (4.7 percent).
The most recent data from the US Bureau of Labor Statistics shows that American consumers spend the most money on housing. In 2023, the average US consumer spent $25,436 on housing, which made up close to one-third (32.9%) of their total annual expenditure.
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.
Baby Boomers (ages 55-75 years old) spend a total of $548.1 billion annually. Gen X (ages 36-54 years old) follow Boomers with $357 billion annual spend. Millennials (25-35) are next with $322.5 billion in annual spend. The Silent generation (ages 76 years and older) spend $162.9 billion annually.
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.
A Generational Breakdown of Overall Spending
Overall in 2021, Gen X (anyone born from 1965 to 1980) spent the most money of any U.S. generation, with an average annual expenditure of $83,357. The second biggest spenders are Millennials with an average annual expenditure of $69,061. Image: Visual Capitalist.
American paper currency comes in seven denominations: $1, $2, $5, $10, $20, $50, and $100. The United States no longer issues bills in larger denominations, such as $500, $1,000, $5,000, and $10,000 bills. But they are still legal tender and may still be in circulation.
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).
Consumers said they expect to increase their spending over the next three months on most essential items. In this category, they expect to increase their spending on gasoline the most—an intent likely driven by higher fuel prices and the expectation that consumers will drive more during the summer months.
For instance, rich folks tend to invest in retirement consistently, invest in education, and take better care of their health by purchasing high-quality products and food.
In fact, at the end of the five years, if you invest $1,000 per month you would have $83,156.62 in your investment account, according to the SIP calculator (assuming a yearly rate of return of 11.97% and quarterly compounding).