Most US households have the same categories of expenses: food, housing, entertainment, transportation, and other expenses. However, roughly three quarters of American households are living paycheck to paycheck, with little savings for emergencies. Read on to learn how you compare to the national standard, and for some tips on how to save some extra cash throughout the year.
According to the US Bureau of Labor Statistics (BLS), the average household in 2015 consisted of 2.5 people with a pre-tax household income of $69,629. Of the money they received, $55,978 was used for expenses. So, what were they spending it on?
The average household spent $6,602 on food, with 39% of the food coming from a restaurant. If each person in the family eats 3 meals a day for 365 days a year, they spent an average of $2.41 per meal. It doesn’t take much to cut the average cost of a meal. In fact, simply eating at home one more night a week can shave $0.10 off your average meal price, resulting in an extra $110 a year!
The housing category includes more than just rent and mortgage payments. It also includes utilities, insurance, and taxes. Overall, Americans spent an average of $17,148 on housing costs in 2015. Since these are lumped into a broad category on the BLS report, it can be hard to track down exactly where the expenses occur. In the state of Virginia, the average monthly electric bill is about $130. To lower this, you can take small steps. For example, unplugging electronics not in use lowers your electricity bill. If you can lower it $10 a month, you can save $120 a year. The same steps can be taken to lower your water or gas bill. Additionally, the average homeowners insurance premium is about $805 a year in Virginia. Shopping around for a new quote may be able to save you some cash.
On average, $2,482 per year is spent on entertainment. This equals approximately $200 a month. According to the below chart based on the 2013 data, the BLS considers admissions fees, audio and visual equipment and services, pets, toys, and playground equipment to all be a part of this category.
There are several easy ways to cut costs in this category. Sign up for a library card to borrow books and movies free of charge. Some libraries even have access to digital portals that let you stream a limited amount of content each month. Look for free community events in your area, and do something you might not consider if you had to pay for it. If you can find ways to trim $20 a month from your entertainment spendings, you’ll have an extra $240 by the end of the year.
This category includes car payments, money spent on gas, car maintenance, and additional transportation costs such as train and plane tickets. Americans spent $9,004 in 2015 on transportation. There are some simple ways to save here, too. Mass transit can save you a lot of money if you live in a city that offers it. If you own a car, shopping for a new car insurance policy can save you around $10 a month, sometimes more, resulting in an extra $120 a year. Additionally, when shopping for plane tickets, utilize resources such as Kayak to compare rates and ensure the cheapest fare.
By making small changes to your existing budget, you can easily add some cash to your emergency fund. You do not need to cut things out of your life completely to save money. Instead, just make a few minor lifestyle changes. For more ideas on how to budget for your lifestyle, check out the Money Management category on the Bank of the James blog.