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 Does it seem like you spent more this year? That’s because you probably did.

Does it seem like you spent more this year? That’s because you probably did.

Does it seem like things got more expensive this year? 

That’s because they probably did, according to data released by the US Bureau of Labor Statistics. Their annual report on average household spending and income found that our bills and expenditures went up almost across the board from 2018 through 2019 – except in one category.

But, are things really more expensive or are we just spending more? And is that really relevant if our incomes went up?

Here are my notes on the data: 

Out of the top 10 largest categories of consumer household spending, 9 of them increased in 2018.

The largest single increase was in the Personal Insurance & Pension segment, with an alarming 7.8% increase in just one year!

The second-largest increase was in Food expenditures, which jumped 2.5% in 2018 to 2019.

It’s interesting to note that Food spending went up both in the Food at Home sub category (+2.3%) and the Food Away subcategory (+2.8%).

And the only category out of those 10 to actually go down in 2018-19?

That would be Education Spending, which dropped a significant 5.6%. 

Transportation was up 1.9% but the subcategory of Gasoline, other fuels, and motor oil climbed by 7.2% while vehicle purchase expenditures actually went down 1.9%.

We spent only 1% more on Housing in 2019 compared to 2018, including rental expenses (+2%).

While it may seem that healthcare is squeezing our monthly budgets, that category only rose by 0.8% from 2018 to 2019. 

According to the data, we also made a lot more from 2018-19, with pretax income soaring by 6.9% (after a 1.5% drop from 2017-18).

In fact, the average pre-tax household income was $78,635 in 2018.

However, we spend $61,224 per year in the typical U.S. household, which means that we fork over about 80% of our pre-tax income to expenses! (And that number is much higher if we look at after-tax income.)

If we shift to real dollars instead of abstract percentages, we find that the average household dropped:

  • $20,091 on housing, whether that’s mortgage, property taxes, etc. or rent
  • $7,923 on food ($4,464 on food at home and $3,459 spent eating out)
  • $9,761 Transportation
  • $7,2962 Personal Insurance and Pensions
  • $4,968 Healthcare
  • $3,226 Entertainment
  • $1,866 Clothing
  • $1,407 Education

According to a different prominent study, here’s the breakdown average American household spending last year:

  • 33% Housing
  • 17% Transportation
  • 13% Food
  • 11% Insurance
  • 7% Health Care
  • 5% Entertainment
  • 3% Clothing
  • 11% Total other expenses

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So, how did your expenditures and spending look like in 2018 and through 2019 so far? And do you have a solid budget planned for 2020? Contact me for any advice or help!