An examination of the average American budget – and suggestions on how the average American may begin saving more

It’s no secret that many folks struggle to make ends meet.
76 percent of Americans live paycheck to paycheck, which means that many people make significantly more or less than the typical American.

If folks below that income level can make ends meet, it goes to reason that the average American’s budget has items that can be trimmed. It comes to reason that everyone can benefit from knowing what can be cut.

The problem is that many people dislike the concept of reducing their spending.
The thought of cutting spending seems depressing, and many people dismiss it without ever considering it. They “deserve” their lot in life.

In reality, the majority of our expenditure is almost imperceptible to us.
When we think about “cutting back,” we usually think of getting rid of things that only account for a small portion of our monthly spending.It’s the vast majority of expenses that we pay without thinking about them that kills us.

That’s what I see in a typical American household budget.I see a lot of expenses that have little to do with daily quality of life and, as a result, I see a lot of potential to save money without sacrificing daily quality of life.In fact, I believe there is more than enough room in there to start saving for retirement, pay off debt, and develop an emergency fund.
Let’s have a look at what we’ve got.

The Ordinary American

Here are the specifics, as taken directly from the original data:

Before taxes, the average American household makes $63,784 per year, or $51,100 per year.

They spend $9,004 on transportation, $6,602 on food (of which $2,625 is spent at restaurants and $3,977 is spent on food eaten at home), $5,528 on insurance and pensions, $1,604 on clothes, $2,482 on entertainment, $17,148 on housing, $3,631 on health care, $1,834 on cash contributions (donations and legally required spousal and child support), and $3,267 on other expenses from that amount.

In this image, the average home has 2.5 members, with 1.3 of them earning a living.
The average family owns 1.9 vehicles, and 63.7 percent of people live in their own home.

What did I learn from this?
To begin with, there isn’t much money set aside for savings here.
It’s only a sliver of the “other expenses” category, and it’s a tiny sliver at that.

Second, there does not appear to be a significant quantity of money that has been squandered.
You could assume that if someone isn’t conserving money, they are squandering it.
They aren’t.There isn’t a lot of fat to remove here.

So, how does the typical person go about saving money?
Let’s have a look at some math.


The average home has 2.5 persons and spends $6,602 per year on food.
Assume a person consumes three meals every day, 365 days per year.
For that average family, that equates to 2,737.5 meals per year.

To put it another way, the average American dinner costs $2.41.

Let’s pretend that the average American household can save $0.10 on an average supper.
You can achieve this by eating out less every other week or eating a particularly cheap supper one night a week — it doesn’t take much to reduce your overall spending.To make up for the difference, you can order water with your meal or get generic ketchup.

Over the course of a year, this equates to a savings of $274.
That’s correct, if you save only a cent on your average lunch, you’ll save hundreds of dollars per year.


The housing figure stated here – $17,148 – covers basic utilities, insurance, and taxes in addition to the rent. Because they’re all grouped into one category, it’s difficult to tell how much comes from where, but we can acquire more information from other sources.

According to the EIA, the average monthly electricity use in the United States is $110.20 per month.
This totals $1,322.40 each year. Now, if you can just save a few dollars on your average energy bill by taking easy steps like gradually converting to LED light bulbs or opening your windows instead of running the air conditioner, you’ll be well on your way to saving a lot of money. Saving $10 on your energy bill each month adds up to $120 per year.

On the other hand, according to Value Penguin, the average annual homeowners insurance price is $952.
This is something you can easily shop around for, so even if you can save $50 a year by switching insurers, that’s $50 more per year.

If you’re looking for a huge shift, housing offers some fantastic savings chances.
When you’re ready to relocate, go for a smaller apartment rather than a larger one.
It saves you money on rent/mortgage, insurance, and taxes. As an average American, if you can save just ten percent on your annual housing costs, you’ll save $1,714 every year.


The typical family spends $2,482 on entertainment each year, and I’m betting that some of the “other expenses” fall into this area as well. To put it another way, this amounts to a little more than $200 per month spent on entertainment.

Again, not much trimming is required to observe a significant improvement.
Simply choose a few different activities to entertain yourself for the evening, such as borrowing DVDs from the library instead of hitting Redbox, having your friends over for dinner instead of going out on the town, checking out a book from the library instead of buying one, or attending a free community event.

It doesn’t take much effort to save $20 a month on entertainment – just a 10% reduction – and that adds up to $240 a year.


This year, the average American spends $9,004 on transportation.
This includes the cost of automobiles, fuel, and vehicle maintenance, as well as airline and train travel.

It’s not difficult to find ways to save money here, as it is in other areas of the budget.
With petrol at $3 a gallon, if you travel 15,000 miles per year and replace your 20 mpg car with a 25 mpg car, you’ll save $450 per year.

If you shop around for auto insurance and save just $10 per month on your policy, you’ll save $120 each year.

People who live in cities save a lot of money by taking public transportation, so if you can discover ways to use it instead of driving to work, you’ll save money as well.

What Does It All Mean?

You’d save $2,700 a year if you made all of the changes mentioned in this article — none of them are major. In the United States, that’s more than 5% of a person’s typical yearly take-home salary.

The important thing to remember is that none of the suggestions I’ve made are extreme.
For the most part, they’re activities you can do once and then forget about without making any significant changes to your lifestyle. The only difference is that your monthly income has increased by more than $200.

A monthly savings of $200 can make a significant difference. It has the potential to transform a scenario in which you are struggling to manage your debts into one in which you are slowly paying them off. It can transform a situation where you aren’t saving anything for retirement into one where you can easily designate 6% of your income to go into your 401(k). It can help you quickly develop an emergency fund if you didn’t have one before.

What matters most to you is the answer to this question.
For the third time this week, you’ve gone out to eat?
Is it necessary to pay more for auto insurance?
Do you have a car that uses a lot of gas?
Or putting money aside for a rainy day?
Are you putting money down for your retirement?
Getting rid of debt?

It is entirely up to you to make your decision.