Sometimes when you step back and take a look at the “big picture” you can learn a thing or two.
Even if you’ve got your monthly budget down to an art, you may not have a grasp on how much goes to different areas of your life throughout the year. I’m talking about the grand total – the big pieces of the pie.
Do you know how big of a chunk of your income goes to housing, transportation, food or entertainment?
The Bureau of Labor Statistics does keep track of where Americans are spending their money with its Consumer Expenditure Survey. Taking a look at where you stack up against the norm is a good way of determining where you might be spending too much, and where there could be opportunities to save.
Here’s what you need to do to compare your yearly expenditures to the average in the U.S. Take your monthly budget and break it down into categories. In order to match the Bureau of Labor’s study you’ll need to figure out monthly expenditures for the following: Housing/owned dwellings, food (both at and away from home), utilities and public service, apparel and services, gasoline/fuel, entertainment and health-care.
One of the easiest ways to calculate all of this is by using personal checks. Go back in your check register and find what you recorded over the course of a few months that fits into all of those categories.
If you aren’t already using personal checks, you can order checks from Check Advantage and save up to 75% off what your bank might charge you. We’ll also send you a free check register with your order, and you can purchase more for just $1.49 each.
The most recent numbers available from the Bureau of Labor Statistics were released in October of 2009 and reflect expenditures from the year 2008.
The study refers to consumer units, which could be single people living alone, single or two-parent families, or anywhere two or more people are living together. For the sake of simplicity, we will refer to consumer units as households.
According to the study, the average American household has an income of around $63,500 before taxes. The bureau reports that the spending increase in 2008 was 1.7%. That’s the lowest rise since 2003 when it was only 0.3%.
However, the report also reveals that prices in all the major expenditure categories rose 3.8 percent, and the average income rose only 0.7 percent from 2007 to 2008.
The Consumer Expenditure Survey indicates the average U.S. household spent more than $6,400 on food and about $2,700 of that was spent dining out. It was a 5.1% increase in spending from 2007, although that’s partly because of rising food prices.
Entertainment spending also rose by 5.1%. The typical American household spends an average of more than $2800 dollars a year on that. What offset the rise in spending on food and entertainment was a drop in transportation and apparel expenditures.
The price of fuel leveled off and Americans spent almost 2% less to fill up their gas tanks ($2,715). Spending on apparel was down more than 4%($1810). However, the cost of health care and personal insurance both rose more than 4%.
Once you compare your own family’s spending to the average, you should be able to identify places where you could cut back, and save that money or use it where it can have a positive impact (like paying down debt).
You also need to consider factors that might make your situation unique. For instance, if you have six children there are a lot of mouths to feed in your home and the amount you spend on food is probably higher than the norm.
Your household income could be higher or lower than the average. You may have recently spent extra money on a new vehicle or home repairs. If you have a long commute to work and drive a gas guzzling SUV, your fuel expenditures might be higher.
Besides looking at where you can spend less, you also need to look at how to change your lifestyle. Could you trade in that SUV for a more fuel efficient vehicle? Could you go out to eat less often? Could you find a better deal on insurance?
These are all ways you can adjust your life to find financial freedom. And it can start when you order personal checks and get your personal finances organized!
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