How to Improve Family Savings

Brent Wiblin, Senior Managing Director, First Republic Bank
December 29, 2021

  • The average family of four spends about $85,000 on household expenditures each year.
  • Take advantage of money-saving tips for families to save money on household expenditures, such as housing, utilities, food and transportation.
  • Learning how to save money as a family can bolster family savings, build an emergency fund and help families hit both large and small savings goals.

Families have many household expenses to take care of each year. It shows in the numbers: The average annual expenditures of a family of four in America, not including family savings funds, are about $85,000, according to most recent 2020 data from the U.S. Bureau of Labor Statistics (BLS). Families need sufficient funds to cover these household expenses.

Perhaps, you are asking yourself: Where does this money go? Or is there a best approach for saving my family money? The first step in growing family savings and meeting savings goals is to understand a breakdown of annual expenditures by household size, which can help you understand how to minimize the biggest household expenses for a family and identify other ways to cut costs and ultimately boost family savings.

Average annual expenses by household size

The average expenditures of a family will vary depending on the number of family members. 

Household Size

Two People

Three People

Four People

Annual Average Expenditures




The average household income before taxes in the United States was $84,352 in 2020. Even for a household size of two people, many Americans spend a majority of their income annually, much of which goes toward household expenses.

Learning effective ways to minimize household expenses can help allocate more money toward savings goals and emergency funds. Even if your family is living comfortably and well within your means, you may have larger financial goals in mind. Optimizing your family savings and utilizing money-saving tips can help your family realize those goals.

Minimizing bigger expenses as a family

Some of the biggest expenses for families include housing costs, transportation and food. Additionally, the cost of consumer goods has risen this year. As the pandemic continues, surges in demand and limited supply chains have driven up prices and raised household expenses for many.

Even with price jumps, families can still limit their spending in many areas, particularly on big expenditures.

Saving money on housing and utilities

Housing costs for a family of four are approximately $27,226 annually. To calculate how much a spending category factors into your overall income, divide the total amount of one spending category by your total income and multiply by 100 to obtain a percentage. You can do this for any category.

For housing costs, and particularly for families with a mortgage, consider these money-savings tips:

  • Refinance: Refinancing to a lower mortgage rate can potentially lower your monthly payments

  • Make an extra payment: Allocating cash windfalls to an extra mortgage payment can help pay off a mortgage faster and save money on interest

  • Invest in energy-saving appliances: Investing in energy-saving appliances or solar panels can lower your annual utility costs

  • Explore other home locations: Moving to areas in which the cost of land is less expensive can create home building and buying opportunities at a more affordable price

Saving money on food costs

A family of four spends approximately $11,033 on food costs annually. It’s possible to save money on food spending and bolster your family savings with a few strategies:

  • Eliminate food waste: You can better manage food waste by planning meals, cooking smaller portions and reusing leftovers.

  • Eat out less: Dining out for a family of four amounts to $4,122 a year. You can spend less by eating at home more frequently.

  • Buy produce in season: In-season produce is more cost-effective, and local farmer’s markets can also provide better deals compared to grocery stores.

  • Buy in bulk: Bulk shopping club memberships or local co-ops can save you more money by allowing you to buy more for less, which can be an especially effective strategy for dry goods.

Saving money on transportation

Transportation costs — another large expense out of a family’s total expenditure budget — amount to about $15,049 annually for a family of four. You can use strategies to trim your transportation costs.

  • Buy used vehicles: Buying used is generally less than a brand-new vehicle.

  • Invest in a fuel-efficient or electric vehicle: Electric, hybrid and fuel-efficient vehicles are better for the environment and your wallet by requiring less spending on gas.

  • Limit driving: If possible, seeking ways to drive less, such as walking or biking, as well as working from home, can cut commute times and gas expenses, as well as wear and tear on a vehicle.

  • Switch to one vehicle: If you’re able, becoming a one-car family can save an additional car payment monthly, as well as fuel expenses.

While these three categories of expenditures are the biggest in a family budget, other ways to save money outside of these areas may be good options for your family.

Other money-saving tips for families

Families may find it helpful to sit down and create a family budget sheet with an overview of their monthly and annual expenses. Creating a budget can help you identify any high-spending areas and help your family start a conversation about how to minimize costs in these categories.

Reaching out to a financial expert may be the best choice to develop strategies to save money. This way, a professional can help families understand your entire financial picture, as well as how to manage their money as effectively as possible.

With some time and effort focused on cutting unnecessary expenses, you’ll have choices about where to allocate this newly saved money, such as placing it into a savings account or emergency fund and taking steps to ultimately reach your financial goals.

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