Friday, October 18, 2013

How the Average American Spends their Paycheck

According to the Department of Labor, the average American makes $62,481 before taxes and this is how they spend it . . how do you compare?
paycheck
(Click to enlarge and be taken to the original source)

I spend far less than this "average" person, but since I earn less as well, it's a little difficult to compare dollar-to-dollar. Of course, it's also tricky because I'm married. So I while I use and enjoy electricity, my husband pays for it (along with car payments and insurance, trash service, dinners out, and more). :) So I ran the numbers strictly for the things I pay for and I used percentages thinking that made the most sense.

~Taxes account for 26%. (This is an oddball number because it combines various state, federal, and local taxes as best I can figure.) I know the first pie chart didn't include taxes/government fees, but how can you not? No one escapes them completely (as far as I know) and they're usually a big chunk money gone!

~Paying half the mortgage is 22% of my earnings if I just pay the billed amount. I'm trying to pay a little extra every month though, so this percentage is higher some months and surpasses the "average" 26.5% sometimes.

~Savings is 19%. I have it taken from my paycheck before I even see it, so I don't miss it. That trick allowed us to pay cash for our wedding and my master's degree :) I don't see a specific savings category in the original and I hope that doesn't mean the average person has no savings!

~Funding retirement and pension accounts for 12%. I'm very lucky my work still offers a pension since they seem to be going by the wayside.

~Food accounts for 4%. This is one of those misleading areas because I look really cheap - but the reality is that my husband also pays for groceries and he always pays when we go out to eat. It would probably be closer to the 10% average if his spending was included.

~Healthcare is 3%, perhaps because all I do is pay for insurance through my work and go in for a $10 checkup once a year. And under my dental plan, cleanings are free, so I only pay if I have a cavity.

~Gasoline, clothing, and entertainment are 1% each. My car gets about 37mpg (16 kilometers per liter) and my commute is a whopping 25 miles so I spend far less than most. Spending on entertainment is really difficult for me, but I prefer to buy experiences like seeing a play or hot air balloon rides over books and movies that I can borrow from the library.

~Other stuff accounts for roughly 10% (including the cats, travel, gifts, what's left over at the end of the month etc.) but since those specific categories weren't mentioned in the original pie chart, I'm content to lump them all together.

My percentages were less in most places, but I wonder if that's because I don't have any children and share expenses? And I'm sure my healthcare costs will increase over the years ;) Anything surprise you? How do you compare?

12 comments:

  1. I will have to do this exercise some time - very interesting! I do spend close to that average on clothes and shoes. I'm not surprised to see that dining out is so high - that's an area where I cut back, and I spend far more on groceries than on eating out. My employment pension contribution is a little over 10%, soon going up to 12%. The rest I will have to calculate! It's great that you save as much as you do and pre-pay on the mortgage as well!

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    1. I'd love to see how your spending compares. Yeah, I wasn't entirely sure what exactly was included in apparel and services - for example, would money spent on haircuts and eyebrow waxes go in that category with clothing and shoes? So I just put them in that "other" group.

      Oh, dining out. That's one area where it's so easy for us to spend way more than we intend. :)

      I have to give credit to my parents for the savings attitude - as a kid, they always made me save a portion of whatever I earned or was given and it stuck!

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  2. PS - I meant to ask what model of car you have, too!

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  3. Gosh... my numbers are... um... different. At least at the moment they are. I spend about 38% on housing, including mortgage, insurance, taxes, upkeep and utilities - but only one more mortgage payment and I'm done! I spend about 20% on health care - but assuming I survive the application process, Obamacare should ease that one up considerably, and I spend about 12% on my cats (yes - I am a total sucker!) Of course, I also make less than 1/3 of what the average American does. I'm sorta struggling to imagine how people manage to spend the amount that they apparently do on all that other stuff. I love my simple little life. But I gotta say, I am looking forward to finances easing up a bit next year, and hopefully I'll be able to start putting some money into savings again.

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    1. 20%, good grief! I hope the Obamacare helps you out! I'm lucky that my employer gives healthcare benefits and rather than give us a raise one year, the company started paying the first $20 toward insurance every month - so nice! I'm sure your cats appreciate the money you spend on them. :)

      I'm so nosy - I wish I could look into people's spending and see what they're buying as well. I think part of it would be having kids to buy things for, bigger houses to fill up maybe?

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  4. That's an interesting way to look at it - now I want to make more graphs of my spending too :) I currently spend almost 50% of my income on rent, but it is worth it to live alone. I will be saving more next year when I move in with a friend.

    I spend about 7% on groceries, which is a lot for me, but includes nearly every meal and as much organic food as I can afford. I also don't drive very much, since I can walk to uni, and have only spent about $350 on petrol (gas) this year.

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    1. I think money on food is money well spent, especially if it costs extra because it's organic or not packed in plastic. It's fantastic that you spend so little on petrol! :)

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  5. Here's my pie chart: http://www.livetolist.com/money/how-to-work-my-payrise/ Oh and I did it post taxes... Just cause then it was % of take home pay, as taxes come out before we get it!

    Admittedly, I do have all these savings accounts, some of which are for bills etc, so they aren't truly savings in one regard. I'm always surprised I don't spend a greater % on food, although it's gone up lately since I'm now in a two person household. It's that much harder when there's mine, yours and ours, for sure!

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    1. Great, I'll check out your post! I agree - taxes should be included, especially since it's a big chunk for most people. We have a savings account to pay for our car insurance bill, since that's generally huge and only paid twice a year. It would put a big dent in the checking account if we didn't save up for it all year long!

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