A Look at the Average American’s Monthly Expenses

John Williams, Director, Estate & Business Planning, First Republic Bank
September 13, 2022

  • The average American household spends $5,111 each month.
  • Housing, transportation and healthcare costs are some of the top expenses.
  • Inflation is causing prices to rise across budget categories.

The cost of living is going up — and so are Americans’ monthly expenses. The continued impact of the pandemic, including labor shortages and supply chain disruptions, has increased the cost of food, housing, fuel and more. In fact, over the last 12 months, consumer prices — a broad measure of inflation — rose to 9.1%, which is the biggest increase in four decades.

This increase in cost of living may result in a spike in monthly spending for many American households. The added spending may even affect people's average net worth as they're less able to save for down payments on homes, retirement and other financial goals.

According to the Bureau of Labor Statistics (BLS), the average household spends $5,111 each month on housing and other monthly expenses. However, this latest figure is from 2020, and given the inflation situation, this figure has likely increased over the past two years.

Read on to learn more about the typical monthly expenses for Americans, how the costs break down and how your spending compares.

The average American’s monthly budget

The BLS conducts an annual Consumer Expenditure Survey to better understand personal finance on a household level. The most recent survey was conducted from January to December 2020 and released in September 2021. The study reflects what the BLS refers to as “consumer units,” which are essentially households of either related family members or roommates.  

The survey breaks down income and expenditures on essentials, such as food and shelter, as well as discretionary spending on apparel, food away from home and other monthly bills, by consumer unit. The following data from the 2020 Bureau of Labor Statistics survey will allow you to assess how your spending compares with the average household.

Average monthly income

The average consumer unit income was $84,352 in 2020, or $7,029 monthly, according to the study. The figure reflects income before taxes, meaning that the average monthly take-home pay is less after taxes.

The spending power of a household’s earnings largely depends on regionality, or where people live. For example, the cost of living in New York City far exceeds the cost of living in Cleveland, Ohio.

Americans in less expensive places may be able to boost their average savings because they typically spend less monthly, while it may be more of a challenge to save in places that have a higher cost of living. That said, salaries also may be lower and job opportunities less broad in regions where it's less expensive to live.

Monthly expenses list

According to the same 2020 BLS study, the average American’s monthly expenses are $5,111, which is about 73% of the average monthly income. This list of expenses covers everything from housing, health insurance and food to entertainment, personal care products and books. Here’s how spending breaks down into a list of monthly expenses by budget categories.

Budget Categories 2020 Monthly Cost Percentage of Income
Housing $1,784 35%
Transportation $819 16%
Personal insurance and pensions $603 12%
Food at home $411 8%
Food away from home $198 4%
Healthcare $431 8%
Entertainment $243 5%
Cash contributions $190 4%
Apparel and services $120 2%
Education $106 2%
Miscellaneous $76 1%
Personal care products and services $54 1%
Alcoholic beverages $40 <1%
Tobacco products and smoking supplies $26 <1%
Reading $10 <1%

Monthly bills: A closer look

The BLS further breaks out spending by consumer units into subcategories of broader monthly expense areas, such as housing, transportation and healthcare. Here’s some additional information to help you better understand the average monthly bills of the American household.

Housing costs

The housing costs below reflect the monthly expenses that come with being a renter or a homeowner, including property taxes, utility bills, renters insurance, natural gas and interest rates on mortgage payments. Mortgage principal repayments, which are considered loans, are reflected in the same 2020 BLS study.

Budget Categories 2020 Monthly Cost Percentage of Income
Owned dwellings $623 12%
Rented dwellings $367 7%
Other lodging (vacation homes, schools, hotels, lodging while out of town) $60 1%
Utilities (water, power, natural gas, etc.) $346 7%
Household operations (includes child care, elder care and other domestic duties) $122 2%
Household supplies $70 1%
Household furnishings $196 4%

Transportation costs

The study details the expenses that make up monthly transportation costs including vehicle purchases (including car payments), public transportation, and car insurance.

Budget Categories 2020 Monthly Cost Percentage of Income
Vehicle purchases $377 7%
Gasoline and fuel $131 3%
Other expenses $289 6%
Public transportation $22


Personal insurance and pension costs

In addition to housing and transportation, many Americans make monthly contributions to a life insurance policy and a retirement account. 

Budget Categories 2020 Monthly Cost Percentage of Income
Pensions and social security $563 11%
Life insurance $41 <1%

Healthcare costs

Finally, here is the role that healthcare costs play in Americans’ monthly expenses. This includes health insurance costs, such as insurance premiums and copays, as well as medical services and medical supplies.

Budget Categories 2020 Monthly Cost Percentage of Income
Healthcare insurance $306 6%
Medical services $72 1%
Medical supplies $14 <1%

Entertainment costs

Entertainment costs are another part of monthly expenses — and often an area in which Americans can cut back if needed. The BLS study calculates how much people spend on fees and admissions, pets, hobbies and other entertainment services, such as streaming services.

Budget Categories 2020 Monthly Cost Percentage of Income
Fees and admissions $35 <1%
Pets, toys, hobbies and playground equipment $72 1%
Other entertainment supplies and services $48


Education costs

While the BLS study doesn’t include student loans as part of education costs because they’re a loan product, it does break down what students pay monthly on average for college tuition, interest on loans and school supplies. More than half of college-educated adults have student loans, and the average student loan debt is $39,351.  

Budget Categories 2020 Monthly Cost Percentage of Interest
College tuition $65 <1%
Finance and interest on student loans $6 <1%
School books and supplies $3 <1%

Personal care product and service costs

Personal care products and services can add up over a year, especially if you’re paying for personal care services, such as haircuts, gym memberships and personal care products.

Budget Categories 2020 Monthly Cost Percentage of Income
Personal care products $32 <1%
Personal care services $21 <1%

Calculate your monthly expenses

As inflation affects your personal budget, keeping track of your monthly expenses can help you identify overspending and areas where you may be able to save. A budget calculator, budgeting apps or even a traditional budget worksheet or template can make noticing your spending habits easier.

These tools enable you to understand where you’re spending your money. To calculate your monthly expenses, categorize your spending into areas like the ones covered above (healthcare, education, personal care, etc.) and determine the total for the year. Then divide that total by 12.

Track your expenses and grow your savings

Understanding your budget for monthly expenses not only helps to limit overspending but also can  help you reach your financial goals. Once you know where your money is going, this can help you determine how much of your income to save each month.

Then you can take any money you've saved and put it in a savings account or build an emergency fund. You can even decide how much you may be able to increase monthly payments on credit cards if you’re trying to decrease your debt payments. The end result is a better understanding of your financial picture and potentially an increased ability to grow your savings, even as costs rise. 

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