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On average, American families spent $6,440 a month — $77,280 a year — in 2023. Housing is the largest expenditure, followed by transportation and food. Together they account for almost two-thirds of household spending, according to The Motley Fool Ascent’s analysis of data from the U.S. Bureau of Labor Statistics (BLS).

If you’re wondering how your spending stacks up, first use a budgeting app or spreadsheet to track where your money goes. Then you can compare yourself with the average U.S. household.

Housing: $2,120 a month

You’ve likely heard the rule of thumb that says to spend no more than 30% on housing. However, skyrocketing costs mean that number is now outdated, particularly if you live in a more expensive part of the country. Housing accounts for 33% of the average American household’s total spending.

According to The Motley Fool Ascent’s breakdown of average monthly expenses, that $2,120 a month includes $385 on utility bills and over $200 on household furnishings and equipment. Our analysis of BLS data shows that monthly housing expenses in 2023 were up 5% over the year before.

How you can save: If housing eats up a large portion of your budget, there are no easy answers. Consider moving to a lower-cost neighborhood or taking on a roommate. Now that interest rates are falling, if you have a high mortgage rate, you may be able to lower your costs by refinancing.

Transportation: $1,100 a month

Transportation sets people back by about $1,100 a month, about 17% of their total. That includes the cost of buying, running, insuring, and maintaining a car. People spend $225 a month on gas and almost $150 on auto insurance. Interestingly, spending on public transport was over $90 a month in 2023 — up 30% from the year before.

How you can save: Public transport and carpooling are two common ways you can reduce your transport spending. You might also shop around to find the best auto insurance deals and consider signing up for a telematics program that monitors your driving in exchange for a lower rate.

Food: $830 a month

Higher food costs have been one of the most painful aspects of inflation. Overall, food costs came to over $830 a month last year — 13% of people’s spending. That’s around $500 on groceries and $330 on takeout and restaurants.

How you can save: If you’re struggling to stay afloat financially, cutting food costs can make a significant difference. It accounts for a big chunk of people’s budgets, and there’s more leeway than with transport or housing costs — especially if you’re able to reduce spending by dining out less often.

Switch to a budget grocery store and see if you can replace pricier ingredients such as meat with lower-cost veggies, grains, and beans. Using cash back apps and rewards credit cards can be a good way to get more value from your spending.

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Insurance, healthcare, pensions, and Social Security: $1,309 a month

American households spend around $750 a month on pensions and Social Security, which equals 12% of their overall spending.

• Healthcare comes to over $510 each month. That includes health insurance, medical services, supplies, and medicines.
• Life insurance and personal liability insurance costs almost $50.

How you can save: It’s hard to reduce a lot of this spending. You might cut costs on medicines by buying generic and comparing prices at different pharmacies. If you have a high-deductible health plan, make sure you understand the tax benefits of a health savings account.

Entertainment, clothes, education, and more: $1,013 a month

We all need to have a little fun sometimes, whether that’s going places, hanging out with friends, snuggling with pets, or watching a series at home. Pure entertainment accounts for just over $300 a month, which is about 5% of people’s total spend.

Other notable spending categories include $170 for clothes, $140 for education, and $200 for cash purchases. Throw in around almost $85 on alcohol and tobacco-related products and we’ve accounted for most of the ways Americans spend their money.

How you can save: It’s important to keep space in your budget for the things you love. The trick is to prioritize what you really enjoy and fit it into your budget. Knowing you’re not breaking the bank makes for guilt-free relaxation time.

Bottom line

It’s interesting to see how you compare with the average American. Just bear in mind that people’s salaries and financial situations can vary widely. What matters is not how you line up with others. It’s how you’re progressing in terms of your own spending, saving, and investing goals.

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