money management spending

Here’s How Americans Spend Money

The average American household earns money primarily from salary. People in higher income groups earn their money the same way. In contrast, people in the lowest income groups tend to get more of their money from social security, loans, and their savings rather than from a salary. As a result, they have to spend everything they make in order to get by. In comparison, the average American and high-earner has the opportunity to save more.

But what’s even more interesting than earning differences is the way that Americans are spending their money. Visual Capitalist did a great breakdown of all of this. They looked at spending in the average American household, the bottom 20% of earners and the top 20% of earners to see how each group.

Who Are Average Americans?

According to this study, the average American household consists of 2.5 people: 1.3 income earners, 0.6 children, and 0.4 seniors. They earn $73,574 per year. Of that, they pay about $10,000 in taxes. They put another $10,000 in savings. The rest goes to various expenses, which we will look at in just a moment.

In contrast, the bottom 20% of earners are in households consisting of 1.6 people (0.5 income earners, 0.3 children, and 0.4 seniors). They earn $25,525 per year. The spend all of it. In other words, if you don’t earn much, then you have to spend it all, and you can’t save anything for a rainy day (or for retirement).

At the other end are the highest 20% of earners. These households are made up of an average of 3.1 people (2.1 income earners, 0.8 children, and 0.2 seniors). They earn $188,102 annually. They pay about $39,000 of that in taxes. Then they put nearly $50,000 towards savings. Then they spend about $100,000.

Housing is Everyone’s Biggest Expense

Unsurprisingly, every group of Americans spends the most significant chunk of their money on housing. The average American household spends nearly $12,000 per year on either rent or mortgage costs. Plus they spend an additional $2480 on utilities. Furthermore, they have another $4154 in other household costs. Therefore, they spend more than $18,500 per year on homes and household expenses. That’s about one-quarter of their total earnings.

People in the bottom 20% spend $6325 annually on housing. Also, they spend $1361 on utilities and $1753 on household expenses. That’s a total of $9439, which is about 27% of their annual income.

Those in the top 20% spend over $21,500 on housing. They spend an additional $3462 on utilities plus another $8216 on other household expenses. In other words, they have pricier houses but also spend more on stuff for those homes than people in the different income brackets. In total, this group spends about $33199 annually on their homes. However, since they earn so much more, that’s less than one-fifth of their income.

How Americans Spend the Rest of Their Money

Everyone has to spend money on housing. You can only cut housing costs so much. Therefore, if you are an average or lower-income earner, then you have to reduce spending in other areas to compensate. Here’s what Americans spend the rest of their money on:


Food is one of the most significant expenses in any household. The average American spends $4363 on food at home. Plus they spend another $3365 dining out and an additional $558 on alcohol. That’s an annual total of $8286 on food and beverages. If you look at the numbers, the average American spends more on food than the bottom 20% of earners spend on housing.

As for that bottom 20%, they spend $2582 on food at home, $1488 on dining out, and just $163 per year on alcohol. That’s a total of $4233 annually. In contrast, the top 20% of earners spend $6677 on food at home. Furthermore, they spend another $6402 annually on dining out. Plus they spend an additional $1228 just on alcohol. That’s a total of $14307. Therefore, the top earners spend more on food than the bottom earners spend on housing and food combined.


The average American spends $4054 annually on vehicles, $4810 on gas and insurance combined, and $712 on other transportation. People in the lower 20% of earning spend $1230 on cars, $2023 on gas and insurance, and $244 on other transportation. High-end earners spend $8287 on vehicles, $8142 on gas and insurance, and $1761 on other transportation. In other words, people spend money on transportation in accordance with what they earn. They get more or fancier cars if they earn more, but they also spend more on other transportation, too.

Additional Costs of Living

Here’s what each of these groups spend on other common expenses. (The numbers are in order: average, lower 20%, higher 20%).

  • Health insurance: $3414 / $1761 / $5335
  • Other medical: $1514 / $731 / $2522
  • Other insurance: $418 / $160 / $903
  • Phone: $1356 / $705 / $2036
  • Clothing: $1833 / $878 / $3633
  • Education: $1491 / $784 / $4492
  • Entertainment: $3203 / $1270 / $6889
  • Gifts and charity: $1873 / $650 / $4170
  • Miscellaneous: $2214 / $1147 / $3963

There aren’t really any huge surprises here. When it comes to extra expenses, all Americans tend to budget their spending proportionally. If you have more then you’ll spend more in every category. Likewise, if you have less, then you will spend less accordingly.

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