## August 11, 2008

### Consumer expenditures - where does our money go?

In order to figure out how best people can save money we first have to know what people spend money on. So it will help to answer the question: What does a 'typical' family spend their money on?

The Bureau of Labor Statistics performs a consumer survey and complies data on what consumers spend money on. This information is summarized in the latest report: Consumer Expenditures in 2005 If you look on page 7 of the document Table 1 shows expenditures broken into income quintiles. I'll look at the third 20 percent quintile as a 'typical' middle income family. The 3rd quintile makes \$42,622 before taxes and has 2.5 family members.

Here is how the expenditures look for the 3rd quintile:

(The 'Other' category shown in the graphic is a combination of smaller expense categories)

Top expense categories are:

Shelter : 19.5%
Food : 13.5%

Utilities: 7.9%
Vehicle purchase: 7.7%
Healthcare : 6.6%
Vehicle expense: 5.5%
Gasoline: 5.1%
Entertainment 4.6%
Apparel & services: 3.9%
Household furnishings: 3.6%

Total expenses for the major categories:
Housing: \$13,234
Transportation : \$7,437
Food: \$5,295
Pensions : \$3,555
Healthcare: \$2,567
Entertainment: \$1,813

Obviously everyones individual spending will vary, but these are typical average values.

I should note that these are not the average figures or exactly the median figures. They are the figures for the average of the 20% of Americans in the middle. The figures here are close to the median but not exactly the same. Average values would be a bit higher because they are skewed upwards by very high income earners. I think that looking at the average for the people in the middle is a very good way to represent the spending for 'typical' Americans.

Also see: