Americans are famous for their style of living and spending habits. Research shows that about 70% of the US economy is accounted for by consumer spending. Have you ever wondered what a typical American budget would consist of? Actually, it depends on “the more you have, the more you can spend”, which is the strategy of most Americans.
Most Americans buy to spend their money on various stuff that can be broadly divided into two main categories:
- Firstly, they spend on essentials such as housing, food, and clothing.
- Secondly, they spend on non-essential goods and services.
Every year the U.S. Bureau of Labor Statistics takes a consumer expenditure survey to analyze the spending habits of Americans. Let us look into the details of the Consumer Expenditure Survey and understand the spending habits of Americans at a different age.
Average monthly budget at different age:
A survey shows that housing accounts for the maximum expense for Americans ranging from 30-35% of the monthly budget.
The first jump:
When they turn 25 and get into the proper career mode, they get the first spike in spending with their first jump of earning. But do you really feel there’s any inter-relationship between age and spending habits?
Let us understand the relationship between age and monthly budget:
Under 25
Fewer than 25 is the age where there are no responsibilities and you can afford to spend on things that you love. Young adults at this age are relatively thrifty; know how to control expenses and thus spend less than what their elders spend in most of the things. In this phase, most of the money is spent on education.
Average monthly expense report:
Housing: $944
Transportation: $527
Food: $408
Healthcare: $82
Education: $214
Entertainment: $113
Total (Average monthly family budget): $2733
25 to 34
The 25 to 34 age group is referred to as millennials where people get into their career phase. They have a proper job that fetches a good monthly income and which they can use in a more efficient way. People in this age group spend money in a sensible way, either to clear off debts or start saving money.
Average monthly expense report:
Housing: $1525
Transportation: $815
Food: $553
Healthcare: $231
Education: $94
Entertainment: $216
Total (Average monthly family budget): $4339
35 to 44
This phase is termed as adulthood where people get into the family way of life. They would want to settle with kids and spend their money on kids. But with the increase in the number of persons in the family, there is a shoot up in expenses expected as well. The housing budget shoots up with finding a bigger place to live. In general, this is the phase when people get stuck with the highest food and housing costs with marriage and/or mortgage expenses.
This age group is termed as Generation-X when your kids enter the teenage phase and the expenses are at a peak that accounts for the driving costs, transportation, education, etc. As kids head to college, education costs also contribute to a major part of monthly expenses. Most people start looking for a passive income at this stage to cover up the expenses.
Average monthly expense report:
Housing: $1763
Transportation: $982
Food: $701
Healthcare: $389
Education: $222
Entertainment: $276
Total (Average monthly family budget): $5813
55 to 65
This age group is called boomer age where the income drops off and the expenses of food and transportation also set low. As with age, there’s a rise in healthcare costs.
Average monthly expense report:
Housing: $1516
Transportation: $835
Food: $583
Healthcare: $426
Education: $97
Entertainment: $277
Total (Average monthly family budget): $4898
65 & above
This age group is called the silent generation or the golden age. In general, older Americans tend to cut down all the expenses in almost all categories with an exception in healthcare. With age, the dependency on medical care and prescribed drugs increases, and thus the health care costs contribute to the major expenses.
Average monthly expense report:
Housing: $1294
Transportation: $571
Food: $459
Healthcare: $480
Education: $22
Entertainment: $205
Total (Average monthly family budget): $3722
Summing up:
No matter what age group you are into, you can still begin to have a hold on your finances with little planning. It’s important to analyze your spending habits and cut down in the areas where you’re overspending. Create a budget and stick to the plan. This way you will soon master the skills of finance management.
