This Is How Much The Average Person Spends Per Month

Have you ever wondered how your monthly expenses stack up against everyone else's? If it seems like everyone else has no problem affording life, while you're there struggling to get by and save a little for a rainy day, you're not alone. Whether you're someone who meticulously follows a budget or simply wings it, it's natural to question what qualifies as normal spending. After all, comparing your habits to the average can provide valuable insights into how you manage your finances. The 2023 Consumer Expenditures Survey from the U.S. Bureau of Labor Statistics gives a detailed look at spending habits across the United States. Released in September 2024, the data captures the financial behaviors of over 134,000 consumer units, a term that includes families, individuals living independently, or groups of people sharing expenses. By breaking down the annual figures into monthly averages, we can get a clearer picture of just how much Americans spend in key categories. The survey revealed that the average annual spending per household or consumer unit in 2023 was $77,280 or $6,440 per month, which is a 5.9% increase from the previous year. That's a substantial amount, even considering it's calculated for the entire household and not necessarily per person. To manage such expenses, a household would likely need to earn more than six figures annually to comfortably cover all costs. Let's take a closer look at how that spending breaks down on a monthly basis. Housing is consistently the largest expense for most households, and understandably so. Homes and apartments are expensive, and so are the bills that come with them. On average, Americans spend $25,436 annually on housing, which translates to $2,120 per month. This category includes costs like rent, mortgage payments, property taxes, and utilities. Keep in mind these figures are positively influenced by the fact that many people purchased their homes a long time ago or have an extremely low mortgage rate. Also, some renters pay below market rate. Transportation is the second largest expense for most households, trailing only housing. In 2023, households spend an average of $13,174 annually, equating to about $1,098 per month on transportation-related costs. This figure includes a variety of expenses, such as car payments, fuel, maintenance, insurance, and public transportation. Notably, a major chunk of this goes towards car payments, with the average new car payment reaching $734 per month according to bank rate. This makes owning a vehicle a huge commitment, especially when factoring in rising fuel prices and the increasing cost of repairs and maintenance. For those relying on public transportation, the costs might be lower, but still represent a notable portion of monthly spending. Grocery shopping and dining out are unavoidable expenses, making food another key budget category. On average, households spent $9,985 annually on food in 2023, which breaks down to about $832 per month. This includes everything from groceries to home-prepared meals to dining at restaurants or grabbing takeout. Less than half of this total spending is spent on food away from home, with the majority going towards food at home. While home cooking is generally more cost-effective, the convenience and social aspects of eating out can quickly drive up those monthly expenses. Rising food prices due to inflation have further stretched budgets, forcing many families to reassess their spending habits, such as buying in bulk, meal planning, or opting for store brands. Food is an unavoidable expense, and finding a balance between cost and quality is important for staying healthy while still enjoying your meals. Financial security is a top priority for many households, and personal insurance and pension contributions reflect this. In 2023, households allocated an average of $9,556 or $796 per month to this category. This includes contributions to retirement accounts like 401ks or IRAs, pension plans, and life insurance policies. These expenses account for slightly more than 10% of the median income. Although making these contributions can sometimes feel like a burden on monthly budgets, they're essential for obtaining a comfortable retirement and providing financial protection for loved ones in case of emergencies or unforeseen events. Entertainment might not be a necessity, but it's still a big part of most people's budgets, adding fun and balance to daily life. In 2023, the average household spent $3,635 or $302 per month on things like streaming services, hobbies, recreational activities, and bigger splurges like concerts or movie tickets. Some of these costs can be cut back, like swapping cable for a cheaper streaming service or checking out free local events. But entertainment spending is often what people value most. It's a way to relax, recharge, create lasting memories, and refresh for the work week. Even as prices go up, finding budget-friendly ways to enjoy life can make a big difference without draining your wallet. Housing costs are the number one expense people need to be careful with, and they're likely to continue rising due to several key factors. First, demand for housing remains high, driven by population growth and increasing urbanization, especially in desirable cities and regions. Additionally, limited housing supply, partly due to zoning restrictions and a lack of new construction, has put pressure on available inventory, making it more competitive and expensive. The rising cost of building materials, labor shortages, and inflation have further escalated home prices and rental rates. Moreover, interest rates, which impact mortgage affordability, which will potentially decline in the near future, are higher than what many people are currently paying. Just over 78% of borrowers have a rate below 5%, while 60% have a rate below 4%. Those lucky enough to have an interest rate below 3% fall to 23% of homeowners, Redfin reports. These factors will make it more difficult to enter the market, pushing more people into rental properties, which in turn drives up rental costs. All these factors together indicate that housing prices will probably keep rising in the near future, since housing is already the biggest expense for most people. It's something to keep in mind. If you're planning to retire early, investing more than the typical 10-15% of your income is crucial, because you'll need a larger nest egg to sustain a longer retirement. Early retirees often aim for financial independence decades before the traditional retirement age, which means their investments must last quite a bit longer, potentially 30, 40, or even 50 years. By saving a higher percentage of your income, you not only accelerate the compounded growth of your investment portfolio, but also practice living on less, which reduces the amount you'll need to withdraw during retirement. This double benefit, building wealth faster and lowering future expenses, gives you more flexibility and security to handle unexpected expenses or market downturns. Aiming for 25-50% savings rates is ideal, as many in the FIRE community suggest. This will be a challenge at first, but it can dramatically shorten your working years and give you the freedom to enjoy life on your own terms. Otherwise, start with at least 10% and work your way up from there. Living beyond your means has become more common, and in some ways, even more accepted today. Instead of learning to wait for things and being okay with less, so many people are focused on getting what they want right now, even if it means stressing about bills later. With easy access to credit cards, loans, and financing options, it's tempting to spend on things like luxury items, vacations, and even housing that really pushes the budget. It's not just the big-ticket items. Seemingly small expenses, like frequent take-out, can add up too. Social media plays a big role in this shift by constantly showing off a perfect, wealthy lifestyle, making it seem normal or even cool to live extravagantly. Wanting to keep up with others or look a certain way can make people prioritize appearances over financial security. With costs rising everywhere, some feel forced to borrow money just to keep up with their lifestyle, even though it's not a sustainable way to live. Most of these expenses have gone up compared to last year due to inflation. If they keep rising at an average rate of 3% per year, they'll double in just 24 years. This shows how even small increases can really add up. When planning for retirement or future expenses, it's important to factor in these rising costs and adjust your savings and budget regularly. Being prepared for inflation can help make sure your money stretches as far as you need it to. These averages can serve as helpful benchmarks to evaluate your own spending habits. For instance, if you're spending significantly more than $2,120 per month on housing, it might be worth exploring ways to reduce costs, such as downsizing or refinancing. It's also important to remember that these numbers represent averages for consumer units, meaning they don't account for factors like location, income level, individual circumstances, or exact household size. A household in a high-cost city will naturally spend more on housing and food than one in a rural area. By comparing your spending habits to these averages, you can gain a better understanding of where your money goes and identify areas for improvement. Whether you're looking to cut back on expenses or simply gain more financial clarity, these insights offer a valuable starting point for managing your budget.