Typical Budget Ratios

Typical Budget Ratios
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Setting up a household budget to track and contain expenses is only half of the battle; it’s sticking to it that is the most important aspect. While some ongoing expenses may vary depending on your own situation, others, such as retirement savings and housing expenses, should meet specific criteria. Although you should consult a professional financial counselor to determine what ratios best meet your individual needs, you can take a cue from what other consumers have found works for them.

Housing Expenses

The Bureau of Labor Statistics’ annual Consumer Expenditure Survey showed that housing expenses accounted for almost $17,000 annually, or roughly one-third of household spending in 2009, and 27 percent of household income. This falls right in line with what mortgage lenders look for when assessing homeowners’ ability to repay a mortgage loan, as most expect total housing expense to be no more than 28 percent of gross monthly income. Housing expense exceeds the next largest budget item, transportation, by a ratio of 2-to-1, food by 2.5-to-1 and insurance and pensions by 3-to-1.


Transportation was the second-highest consumer expenditure in 2009, with a total annual household spending of more than $7,500, or 12 percent of gross annual income. While the number may seem high, it is based on a household with two vehicles. Roughly $2,000, or 3 percent of gross annual income, is spent on gas and motor oil. This budget item may vary for urban dwellers who use mass transportation and households with more or fewer than two vehicles.


The amount of income that people surveyed spent on food made that expenditure No. 3 on the list of household expenditures. Households spend roughly 10 percent of annual income on food expenses, with 60 percent spent on food consumed at home and 40 percent dining out. While these numbers may seem high, they are less than the 15 to 20 percent recommended by some financial counselors.

Personal Insurance and Retirement

Consumers are concerned about their future, spending an average of 9 percent of their gross annual income on personal insurance and contributions to retirement funds. Financial investment firm Charles Schwab cautions that this is not enough, however. If you start saving for your retirement in your 20s, you should put away 10 to 15 percent of your gross annual income, 15 to 25 percent if you start saving in your 30s and 25 to 35 percent if you start in your early 40s.

Additional Expenses

The average consumer spends 5 percent of their gross annual income on healthcare expenses, 4 percent on entertainment and 3 percent on apparel and related services. After all of the standard expenses, that left more than $5,000, or 8 percent of gross annual income, available for savings or other expenses.