Comments on: How the Average American Family Spends Their Income – And How to Trim It

By: Jeanne

Jeanne — Thu, 14 Jan 2010 20:22:36 +0000

$10,000 a year! they don’t live in NY. my real estate taxes are more than that, and I live in a basic ranch style home. sounds like this budget is a dream…

By: WhirlMind

WhirlMind — Mon, 11 Jan 2010 10:11:42 +0000

A suggestion :

In this post, you could have :

1. Given the list as a table, for better readability of the list.

2. Presented an additional column that shows the percentage of each expenditure segment to the total expenditure.

By: Cathy

Cathy — Wed, 06 Jan 2010 00:21:27 +0000

Wow, where does this average family live? I need to move there! Sounds pretty cheap compared to where I live!

By: Jim

Jim — Tue, 05 Jan 2010 19:21:37 +0000

Shevy, you’re right about the other financial interest being in the Misc catgory. Good catch.

By: Margo

Margo — Tue, 05 Jan 2010 18:34:59 +0000

Another route to saving on clothing, rather than thrifting, is to focus on buying quality and maintaining your weight so you can wear the same size year over year. There are $20 sweaters that don’t survive a season (without losing shape, fading, or snagging), and some I’ve gotten for $60 that last for 4-6 years without any problems.

By: Henry

Henry — Tue, 05 Jan 2010 16:38:37 +0000

Trent (who is better than you or me) acknowledges the expense of alcohol (why not, it’s established that that fine, Nordic Man with his hyperthyroidism swills it down, just like his grandparents drinking the rinse water out of wine bottles) but will not acknowledge tobacco use. Quit? That’s your answer? Trent’s got the attitude of “I don’t do it, so you have no excuse to do it either…”?
Even if you need to hold onto the holier-than-than-thou attitude, there are still people out there that have to budget and manage finances, and are not responsible for the tobacco expense in their lives (i.e. a wife who budgets with a husband or parent that smokes and it must be taken into consideration).
Readers, just remember who is better than you.

By: George

George — Tue, 05 Jan 2010 16:14:32 +0000

For those wondering if the 21% figure is accurate for taxes, I added up my own taxes last year. State & Federal income tax, property tax, SSI, Medicare, automobile tags, fishing license, etc. (no sales tax in Oregon). The total tax bill was 27% for our family of two adults, one income between $80k and $100k.

Taking out the SSI, it’s not hard to match my figure to the average figure provided in this post.

By: Ellen

Ellen — Tue, 05 Jan 2010 15:37:41 +0000

I agree that a discussion of what percentage of your income is going to various categories (with more explanation of what is actually included in the categories)would be more helpful.

Also, if it’s true that Americans are carrying a heavy debt load & only slowly beginning to increase savings, how is it that the average family depicted reports expenses lower than income (if you assume the difference is all taxes)? I expected to see something summarizing that shows outlay exceeds net income by x amount.

Am looking forward to many lively discussions on the individual items!

By: karyn

karyn — Tue, 05 Jan 2010 15:11:49 +0000

So sad how reading compares to the alcholol budget. I would like to think that’s because people are so frugal they are making great use of the library – but that’s probably not the case most of the time…I keep a budget but I would love to have an illustration like this for our family – visuals can be powerful. I guess I need to become more computer savvy.

By: JT

JT — Tue, 05 Jan 2010 14:11:42 +0000

Interesting topic, looking forward to the rest of the series.

By: deRuiter

deRuiter — Tue, 05 Jan 2010 11:28:33 +0000

This is going to be great fun! Eyeballing that budget, there’s A LOAD OF FINANCIAL FAT which can be stripped from so many categories. Used books vs. new, and buying used books and putting some up on ebay or Amazon for sale, books could easily be turned from a cash liability into a cash cow. Thrifting for clothing, household goods, toys, everything would slash a couple of budgets. The folks who are good with coupons and / or vegetable garden could cut loads of money out of this budget. Don’t drink, don’t smoke and your health is better, saving you almost a grand a year. This budget explains why the average American is in debt and always will be. The cause is financial stupidity and an inability to prioritize spending.

By: David/Yourfinances101

David/Yourfinances101 — Tue, 05 Jan 2010 10:56:43 +0000

I think what people fail to realize is that if you kick Social Security out of there, that food and transportation are second and third. Well, they may realize it, but they don’t act like it. Cutting your food bill can lead to incredible annual savings, knowing how to maintain and care for your car can save thousands over its life as well.

By: Shevy

Shevy — Tue, 05 Jan 2010 04:09:28 +0000

Oh, and Jim wasn’t quite correct when he said:
21% is the difference between total pretax income and what they spend on the specific categories. So that gap is the combination of income taxes, savings, interest payments, and spending out of savings.

Interest payments are included in the miscellaneous category as: “finance charges other than those for mortgages and vehicles”.

There doesn’t appear to be a separate category for savings, however.

By: Shevy

Shevy — Tue, 05 Jan 2010 03:36:42 +0000

@Kevin & Kathleen
According to the Bureau of Labor Statistics Glossary, the cash contributions category includes: cash contributed to persons or organizations outside the consumer unit, including alimony and child support payments; care of students away from home; and contributions to religious, educational, charitable, or political organizations.

One of the eye-openers for me was that spending on life and other personal insurance is $309, while spending on tobacco is $323 and on alcohol is $457. That says a fair bit about people’s priorities right there, doesn’t it?

Also, some things are in rather odd categories. For example, pets and anything to do with them (including vet bills) are classed under entertainment, along with TV purchases, DVD rentals, movies, running shoes, fitness memberships, etc.

And the miscellaneous category includes, among other things, funerals and union dues!

This is going to be a *very* interesting series!

By: Kirk Bond

Kirk Bond — Tue, 05 Jan 2010 02:57:43 +0000

I still don’t see how they allocated for taxes. People pointed out the income and then expenditures and implied the difference was taxes. That is really poor math.

Perhaps the government is not keen on highlighting taxing costs.

For my family, taxes are by far the highest category. Nothing else comes close…especially when accounting for taxes that we often ignore in our day to day…

Thus, although I find this chart helpful, I find it hard to equate to how we actually spend our money.

By: Kevin

Kevin — Tue, 05 Jan 2010 02:05:10 +0000

@Kathleen: I’m assuming “Cash Contributions” represents charitable giving…

By: asithi

asithi — Tue, 05 Jan 2010 01:32:06 +0000

@George – Sorry I can’t see the numbers on the diagram. I just added the numbers up on the body of the post.

By: Kathleen

Kathleen — Tue, 05 Jan 2010 01:22:32 +0000

Reading has a category… booze has a category… but charitable giving doesn’t? Wow, that’s a sad state of affairs!

By: Jim

Jim — Tue, 05 Jan 2010 00:46:20 +0000

“How would the Dept of Labor know what we spend a month for alcohol? I always paid cash…”

Their data is based on surveys. Its the Consumer Expenditure Survey from the BLS. They actually have the Census bureau do the survey. As with any survey there will be a margin of error.

By: Kris

Kris — Tue, 05 Jan 2010 00:18:26 +0000

Really looking forward to this series, and the grand wrap-up at the end. Obviously %’s are more relevant than actual amounts stated, but will be nice to see the picture of an ‘average’ family and their expenditures.