If you aren’t a fan of budgeting, dividing expenses into these seven categories can help.
Out of curiosity, we all like to know how many others are doing and how much they spend, but how your spending habits compare everyone has a significant value.
This information lets you compare your spending habits than the average, giving you the ability to adjust your spending. A closer look at how your friends and neighbors spend their cash will show you how you can cut your own expenses.
How people spend
When you see people in your neighborhood, driving a new car to the mall to buy clothes and everywhere else to spend money, chances are you’ve wondered about how they make this possible and what you can do to have that luxury too. The most recent report, consumer spending in 2009, published biennially by the U.S. Department of Labor U.S. Bureau of Labor Statistics, provides some answers to your questions.
This survey follows the expenditure of “consumption units” which are defined as “members of a household consisting of (a) the occupants are related by blood, marriage, adoption, or other legal arrangement, (b) only one person living alone share with others, but is financially independent, or (c) two or more persons living together who share responsibility for at least two of the three main types of expenditure. “Take a look at how these people, or units, spend their money.
Why it is useful to know
According to the survey, the average consumer unit spent nearly 78% of their income just seven major expenditure categories. If you are not a big fan of budgeting and keeping track of every penny you spend, breaking your spending in these seven categories is a quick and easy to take a snapshot of your financial situation. If you never tried to budgeting your expenses compare to those of other consumers can be just the catalyst to get you started.
The seven major expenditure categories are listed below in detail. They are: housing, transportation, food, personal insurance and retirement, health, recreation, and clothing and services. In general, for all expenses, except health care, the youngest and oldest of us spend the least, and numbers for people aged 25-64 are above average in spending.
Keeping a roof overhead costs of the average consumer unit 26.9% of its annual income, amounting to an average of $ 16 895 each year. This is the easiest class to go far.
If your housing costs seem to be in on the high side, it may be time to reevaluate your living situation.
At 12.2%, transportation is another large part from the income of the average consumer unit. The cost of vehicle ownership accounts for 4.2% of this number, excluding gasoline and oil, which adds another 3.2% to the tab. Cash, the total average cost of transport for the year comes to $ 7658 each year.
Owning a car brings with it the baggage of some important bills. If you can rely on public transport, you can probably reduce your costs by half, because buying a bus ticket is often more expensive than paying for gas, maintenance, insurance and license parking.
Everyone has to eat, and do the accounts for 10.1% of expenditure for the average consumer unit. Food at home accounted for 6.0% of that number and food away from home accounted for 5.7%. The total cost of the food comes to $ 6,372 on average.
If your food bill arrives on the high side, you can try to cut costs by eating at home, take a bagged lunch to work or the conduct of group meals, such as potluck instead of eating out.
4. Personal Insurance and Pensions
Although the personal savings rate in the United States is often cited as a negative number, 8.7% of revenues used to finance personal insurance and pensions. Most of these, 8.2% goes to the Social Security Administration to fund payments to current retirees. The average expenditure is $ 5,471 a year.
Despite the high cost and increasing, health care, this category represents only 5.0% of the income unit means. The disbursement of approximately $ 3,126 a year, but this category rears against the trend. Of course, costs increase with age, with those over 65 pay nearly a third more than those under 25 years. (To learn how to take action against one of the biggest financial post-work worries in the fight against the high cost of health care, poor health could drain your retirement savings and common concerns for retirees.)
Everyone likes to have fun, but interesting, to pay for the accounts of fun for only 4.3% of revenues through the unit. This equals $ 2,693 per year for the average consumer.
If your budget is really tight, it is the only area of expenditure that you should first cut it’s spending that is easier to give up. For example, cutting unnecessary services or stay at home instead of going out has the potential to make a few hundred dollars a month back in your pocket.
7. Apparel & Services
Keep the clothes on their backs (on average) will cost 2.7% of your income. For the average consumer unit, that’s about $ 1.725 each year.
Shopping for bargains, avoiding the latest fashion trends, buying quality items in classic styles and shopping seasonal sales can help you save a few dollars in this category.
Consideration of Location
Everyone knows that it costs more to live in some areas than others. The survey divides the data by location, it shares into four regions. Overall, the costs of the West were the highest in almost all categories, while costs in the South were the weakest.
To get a better idea of the costs for your area, especially if you live in an expensive city like Los Angeles or in a small town, like Addison, Alabama, you can use one line for a cost-OFA? Life calculator to compare your spending with other areas of the country.
If you want to move, it pays to consider the geography. Just live in the right place can significantly trim your costs.
Put your knowledge to work
Knowing the number of consumers on average gives you a chance to see how you stand compared to the rest of the country. While exact figures will change from year to year, the categories are unlikely to exhibit much change. By comparing your spending habits in relation to these categories provides benchmarks to evaluate your personal financial situation and the possibility of applying reductions in spending. Ideally, these reductions should lead to free up some of your money, which can then be used to increase the amount you are dedicated to saving and investment.