Budgeting can be challenging, particularly in a rough economy, and many families wonder where they stand compared to other families. There's no single average monthly budget that works for everyone. Your average budget will be affected by factors such as your income, geographic location and debt load, but national averages for common necessities can provide some guidance as to what you can expect to spend.
The Bureau of Labor Statistics estimated the average annual expenditures for a family at $60,060 in 2017. This amounts to around $5,005 per month. Conversely, the Internal Revenue Service publishes national standards for expenditures on necessities such as food, clothing and basic hygiene supplies, but not including housing or transportation. Cost can vary from one area of the U.S. to the next. A family of four living in Dallas, for instance, will see a monthly cost of living of $6,291, while a family in San Francisco can plan to spend about $12,370 per month.
Factors Affecting Budget
Income is a major factor determining average monthly budgets, and people with higher incomes tend to spend more each month; they may also contribute more to investments. Debt can eat up a significant portion of your budget as well, so your budget will be partially determined by your total debt. If you live in a small rural town, you may be able to live much more affordably than someone living in Dallas or San Francisco.
Your spending decisions can significantly affect your budget, especially when it comes to how you determine what constitutes a necessity. For some people, high-speed internet is a must-have, while for others, it's a luxury item that can easily be eliminated. How you allocate your money can also affect your budget. Some families of two put a significant portion of their income toward savings or paying off debt. Others only make minimum credit card payments, have no debt or don't save. Your budget will generally be more costly if you save money, have investments or have a lot of debt. Luxury items, food preferences and your housing situation can also affect your budget. For example, people who live in areas with high property taxes tend to budget more for housing.
Necessities such as food and shelter can't be eliminated from your budget. Your housing costs should generally take up no more than 25 to 30 percent of your gross earnings. According to the Bureau of Labor Statistics, the average monthly housing cost in the U.S. in 2017 was $1,657. Food is also a major budget cost. On average, Americans spend 5 percent of their income on food, with another 6 percent on dining out, making a total of 11 percent. If you make $3,000 a month, that's $330 a month on food for you alone. Costs vary depending upon age and whether you're living on a frugal, moderate or expensive budget. If you need to own a car, your necessity budget will also increase. The Bureau also puts the cost of car ownership at $9,576 per year, which is nearly $798 per month.
Extras to Consider
While they might seem like necessities, you generally don't need cellphones or cable television to survive. These items can greatly increase the cost of your monthly budget. For example, J.D. Power reports that American have an average monthly service bill of $157, which is up from $149 from 2017. You can look into ways to lower this monthly cost, including switching to a less expensive service provider. Clothing, entertainment and similar items will also inflate your monthly budget, and decisions about how often to eat out and whether to use luxury products can also affect your budget.
- AAA Newsroom: AAA Reveals True Cost of Vehicle Ownership
- Bureau of Labor Statistics: Consumer Expenditures -- 2016
- CNBC: See how your spending compares with that of the average American — and the US government
- CNBC: Here's how much it costs a 4-person family to live in the 15 largest US cities
- Value Penguin: Average Monthly Mortgage Payments
- USA Today: How much should you budget for groceries?
- Buying & Owning a Car | FTC Consumer Information
- J.D. Power: Smartphones Become Preferred Channel for Buying New Wireless Devices, J.D. Power Finds
Van Thompson is an attorney and writer. A former martial arts instructor, he holds bachelor's degrees in music and computer science from Westchester University, and a juris doctor from Georgia State University. He is the recipient of numerous writing awards, including a 2009 CALI Legal Writing Award.