Many Americans spend a sizable portion of their income to maintain a roof over their heads, put food on the table, and ensure they have transportation. Other common expenses in household budgets include education, child care, health care, retirement savings, and entertainment.

Although inflation has significantly cooled from its 40-year high in 2022, prices for various goods and services remain elevated. This has left consumers with less money in their budgets for savings and debt repayment.

In this era of persistent inflation, more Americans view financial success as living comfortably rather than being a millionaire or having a high-paying job. Over half (56 percent) believe that financial success means being able to afford day-to-day expenses while still having enough money left over to save.

You can assess how your own budget compares by looking at the average American household budget.

According to the most recent Consumer Expenditure Survey, the average household earned $94,003 before taxes in 2022 and spent $72,967. The report, published by the U.S. Bureau of Labor Statistics (BLS), details average spending across various categories, with significant expenditures including housing, transportation, and food.

Average 2022 household earning and expenditure statistics
Household earnings$94,003
Total household expenditures$72,967
Housing expenditures$24,298
Transportation expenditures$12,295
Food expenditures$9,343
Increase in household expenditures from 20219.0%
Percent of people’s income devoted to living expenses77.6%
Area of largest expenditure increaseFood (12.7%)

In the aftermath of the COVID-19 pandemic, inflation surged to 40-year highs due to increased demand from stimulus checks, low interest rates, and government spending, while economic activity slowed because of shutdowns. Labor costs rose due to worker shortages, and high consumer demand led businesses to raise prices.

Although inflation has cooled significantly, prices remain high for many items, affecting people’s ability to save. According to Bankrate’s 2024 Emergency Savings Report, only 16 percent of U.S. adults have enough emergency savings to cover three to five months of living expenses, while 27 percent report having no emergency savings at all.

Additionally, nearly two-thirds of Americans (63 percent) said that inflation is causing them to save less for unexpected expenses.

According to the BLS survey, the largest expenditures were housing and transportation, which made up 26 percent and 13 percent of people’s pay, respectively. Another significant spending category was food, which accounted for 10 percent.

More than eight in 10 Americans surveyed by Debt.com in 2023 reported budgeting their money, a number that has been trending upward since 2018. The vast majority of budgeters in the survey said this practice helped them get out of debt or avoid going into debt.

One way some people manage living expenses without incurring debt is by having a side hustle. In fact, 33 percent of Americans with a side hustle use that income to pay for regular living expenses, according to Bankrate’s 2023 Side Hustle Survey.

Income taxes

According to the most recent BLS survey data, the average pre-tax household income in 2022 was $94,003. Since 2018, except for 2023, married households filing jointly with this income have fallen into a lower tax bracket compared to single filers, head-of-household filers, and married couples filing separately.

Retirement contributions

According to Northwestern Mutual’s Planning & Progress Study, the average retirement savings in 2024 was $88,400, a decrease from $89,300 in the previous year.

The study also provides a breakdown of average retirement savings by generation in 2024:

GenerationAverage amount saved for retirement
Generation Z (ages 18-26)$22,800
Millennials (ages 27-42)$62,600
Generation X (ages 43-58)$108,600
Baby boomers (ages 59-77)$120,300

Average cost of utilities

On average, people spend about $329 per month on utilities such as electricity, natural gas, water, trash, and sewer services, totaling $3,948 annually. The cost of these utilities can fluctuate with the seasons. For instance, natural gas expenses often rise during the colder months when heating is used, while electricity bills tend to be higher during the summer due to air conditioning. Utility bills also vary by state and climate.

To save on utility bills, consider fixing leaky faucets and ensuring lights are turned off when not in use. In the colder months, you can save by lowering the thermostat when the house is empty or reducing the heat by a few degrees and wearing extra layers.

Average cost of food

A significant portion of most household budgets is devoted to food. In 2022, food was the third largest spending category for Americans, according to a BLS survey. The cost of food has been rising due to inflation, with prices for food eaten at home increasing by 8.4 percent over the past year.

Here are the changes in food prices over the 12-month period ending in May 2024, as reported by the BLS:

FoodSeasonally adjusted percentage change ending in August 2023
Meats, poultry, fish, and eggs+2.4%
Cereals and bakery products+0.7%
Dairy and related products-1.0%
Fruits and vegetables+0.6%
Nonalcoholic beverages and beverage materials+1.3%

Here are strategies to counter rising prices and cut costs on groceries: create a weekly meal plan with a corresponding shopping list, opt for less expensive cuts of meat, choose generic products over brand names, and always shop on a full stomach to avoid impulse purchases.

Average cost of housing

Housing expenses saw a 7.4 percent increase overall in 2022 compared to the previous year, reaching an average of $24,298 per household, according to the BLS survey. Property taxes on single-family homes also rose, totaling $363 billion in 2023, up from $340 billion in 2022 and $328 billion in 2021, as reported by real estate data firm ATTOM.

For those aspiring to own a home but currently do not, affordability remains a major barrier. According to Bankrate’s 2024 Home Affordability Report, 78 percent cite issues like inadequate income, high home prices, and the inability to afford down payments and closing costs.

Rent costs have also been on the rise, with the average monthly rent climbing to $2,036 in May 2024 from $1,969 a year earlier, according to Zillow’s Observed Rent Index. Among the most affordable regions to rent are Rolla, Missouri; Indiana, Pennsylvania; and Farmington, Missouri. Conversely, the most expensive places to rent include Kahului, Hawaii; Edwards, Colorado; and Jackson, Wyoming.

Cost of education

Education costs vary significantly depending on whether students are in K-12 or college. In 2023, families with children in elementary through high school spent an average of $890 on back-to-school items, marking a record high since the National Retail Federation began tracking this data in 2003. Overall, back-to-school spending for the year was expected to reach $41.5 billion.

Cost of college

For college tuition during the 2023-24 school year, College Board data showed the following average costs:

  • Public, in-state, four-year university: $11,260 (up 2.5% from the previous year)
  • Public, out-of-state, four-year university: $29,150 (up 3% from the previous year)
  • Public, in-district, two-year college: $3,990 (up 2.6% from the previous year)
  • Private, four-year, nonprofit university: $41,540 (up 4% from the previous year)

Apart from tuition, college students also face significant living expenses. On-campus housing and meals cost an average of $12,302 at public, four-year institutions, while off-campus students pay around $11,983, according to EducationData.org.

As for college savings, the average balance in a 529 college savings account was $27,741 as of June 2023, with a total of 16.25 million accounts holding $450.5 billion in assets, according to the College Savings Plans Network.

Owning and maintaining a car is a significant financial commitment for many Americans, consuming a substantial portion of their household budgets. As of October 2023, the average price of a new car was $48,334, while a used car averaged $26,533.

Beyond the initial purchase cost, ongoing expenses associated with vehicle ownership include insurance, maintenance, and fuel. Currently, the national average price for gasoline stands at $3.51 per gallon, according to AAA Gas Prices, with the highest-ever recorded average price hitting $5.02 in June 2022.

Bankrate reported that more than 40% of vehicles financed in the fourth quarter of 2023 were new vehicles. In the first quarter of 2024, average monthly loan payments for new and used vehicles were $735 and $523, respectively, as per Experian data.

Creating and sticking to a household budget may seem intimidating, but it can significantly reduce unnecessary expenses and help you achieve financial goals, whether you’re saving for emergencies, investing in a CD for a secure rate, or seeking higher returns through a money market account. Getting started with budgeting can be straightforward with these steps:

  1. Choose a budgeting approach. Consider methods like the 50/30/20 rule, which divides your income into needs, wants, and savings, or a zero-based budget that assigns every dollar to categories including savings.
  2. Set up a budget worksheet. Whether digital or on paper, a worksheet is invaluable for tracking income and expenses. It helps you monitor where your money goes and where adjustments can be made.
  3. Calculate your income sources. Identify all sources of income, whether it’s your main paycheck, side gigs, or rental income, after accounting for taxes.
  4. Monitor spending habits. Categorize expenditures such as housing, transportation, food, healthcare, entertainment, savings, and debt repayment. Include both fixed costs and variable expenses.
  5. Adjust as necessary. Update your budget regularly to accommodate changes in income or expenses. Quarterly reviews can help ensure your budget remains aligned with your financial objectives.