The Average Household in 2019 Spent $63,036. How Much Did We Spend?
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It’s not how much you earn, it’s how much you’re spending
Alas 2019 was my last single taxpayer year. By October, I was pulling back on spending. And by December, we were engaged and having money dates.
Beyond the nerve wrecking moment of truly caring for someone other than myself for the rest of my life, 2019 was epic. By summer, we drove to Canada for a weekend and then we traveled to 12 countries in 14 days in the summer. Money was definitely getting spent, however we moved in together by Fall to save money.
While most people think budgeting and discipline is a bad thing, we learned that it was a pathway for our household to level up. You end up learning how to say “No” to people and experiences that don’t add value to you. In some occasions, you say “No” to yourself.
Either way, managing money is an opportunity that leads to a better you.
Wow 2019 seems like a lifetime away
The average American Household spent $63,036 in 2019. Average annual expenses increased from 2018 to 2019 for eight of the 14 categories. Those elements include housing, food, apparel and services, transportation, healthcare, personal care products and services, education, and cash contributions.
The report from the Bureau of Labor and Statistics is not all doom and gloom. Turns out, average income before taxes increased by 5.4% to $82,852. Goes to show you that people are getting paid.
How we are using money is likely the culprit of living paycheck to paycheck.
Most families are saving less than 10% of what they earn. While the 401k is one of the best available retirement saving options for many people, only 32% of Americans are investing in one, according to the U.S. Census Bureau.
According to this survey by the Transamerica Center for Retirement Studies, the median retirement savings by age in the U.S. is:
- 40 year olds: $63,000
- 50 year olds: $117,000
- 60 year olds: $172,000
If these trends continue, most households will not survive the high tide of inflation. Especially as the average living expenses are slated to increase to over $100,000 per year. With that being said, The Neighborhood Finance Guy‘s household is all about working less and investing more today.
Let’s dive into some more numbers.
Table #1. Average US Household Expenditures for select expenses for 2019
| Spending Categories | Avg. American Household | Percent of Total Avg. Expenses | TNFG Household | Percent of TNFG Household |
| Housing | $20,679 | 32.81% | $10,758 | 14.98% |
| Transportation | $10,742 | 17.04% | $239 | 0.33% |
| Food | $8,169 | 12.96% | $4,529 | 6.30% |
| Healthcare | $5,193 | 8.24% | $2,497 | 3.48% |
| Entertainment | $3,090 | 4.90% | $1,631 | 2.27% |
| Cash Contributions | $1,995 | 3.16% | *$0 | 0.00% |
| Apparel & Services | $1,883 | 2.99% | $2,936 | 4.09% |
| Education | $1,443 | 2.29% | $7,876 | 10.96% |
| Personal Care | $786 | 1.25% | $1,395 | 1.94% |
| Other and/or Miscellaneous | $1,891 | 3.00% | $3,474 | 4.84% |
| Personal Insurance, Investments & Pension | $7,165 | 11.37% | $36,500 | 50.81% |
| Total Spending | $63,036 | 100% | $71,835 | 100% |
Spending less and Investing over 347% is Not Normal
In order to keep mathematical equivalence, Table #1 shows the reported average US household expenditures and the percent in which that category is represented in the Total Spending. So in short, the average American household paid 32.81% of their take home pay for housing, whereas the TNFG home spent about 15%.
This subtle difference translates to a Wealth of future opportunities. On top of this, note that there is a rental real estate property’s mortgage on the TNFG’s side. In essence, miss managing money merely add more work to your life.
This was no way near easy
To make this abundantly clear, getting to this point is not easy. Personally, my wife and I didn’t know that we would be at this point.
When we started respectively, I was making $23k before taxes which ended up being $1k per month (paid monthly no less) while she took a sales job making $44k before taxes.
So if you are looking at your checking and noticed more month than money, we completely understand. It’s a journey. We cut back on what was hip, trendy or cool for peace of mind. You really get to decided what kind of life you want to live, from this moment forward.
Below is Table #2 showcases where our dollars went vs the average. I even added notes for your consideration.
Table #2. Comparing Household Expenditures
| Spending Categories | Diff. by Percentage for Avg. vs TNFG | Wealth Notes |
| Housing | -54.35% | Housing costs should be limited to less than 25% of take home pay after taxes. It should include utilities, insurances, and even HOA fees |
| Transportation | -98.05% | Transportation costs should be limited to less than 8% of take home pay after taxes. It should include gas, maintenance, insurances, etc.. |
| Food | -51.35% | Food costs should be limited to less than 5% of take home pay after taxes. This can save your health and waistline. |
| Healthcare | -57.81% | Try looking into Health Savings Accounts. Triple-Tax advantages. |
| Entertainment | -53.68% | Learn to do more with less. There is no sign that equates fun with spending all your money. |
| Cash Contributions | -100% | N/A – since I do pre-tax donations and generally don’t track this. For most people, this is money to family, church and charities. |
| Apparel & Services | 36.84% | Non Negative means that my household spent more in this category. Which is not good. |
| Education | 378.92% | My student loans will start taking $1k per month starting February 2022. I can’t escape this for now. |
| Personal Care | 55.70% | Way to damn much. I’ll blame it on the wife. But not sure what we are doing here. It will be interesting to see the difference in 2020. |
| Other and/or Miscellaneous | 61.21% | This other category captured Travel, engagement, and etc. It should be back to normal in 2021 since the wedding was 2020. |
| Insurance, Investments & Pension | 347.02% | This is the only non-negative that’s a positive since we are investing way more than the average household. |
If you want to make changes to your spending?
Don’t skip talking to your family. First of all , you might feel anxious or embarrassed but it’s part of the steps of building confidence.
Secondly, create a SMART plan for your home, filled with fun dreams and hobbies that fuel you without leaving you feeling drained.
And finally, decide what’s important to you and what feeds your future versus starving the life that could have been for temporary joy today.
Quick steps to track your spending:
- Use Mint.com or Personal Capital. Both apps are free and will help you understand the full picture of your wealth.
- Start listening to financial podcasts. There are many podcasts covering money mindset without the judgement, investing, retirement planning and even family money. If you are afraid to talk to others about money, it’s ok to listen.
- Stay creative and resourceful. The finish line is not going anywhere. The question is are you going anywhere? The resolution to that is to get active and play a pivotal role in your life.
No matter if you are in the Dave Ramsey debt-free journey, the wealth snowball, the FIRE Movement; the finish line is not spending. The starting line is living.
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