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The Average Family Budget: Breaking Down All The Key Expenses

The Average Family Budget: Breaking Down All The Key Expenses

Sorting out your personal finances can sometimes feel like putting together a giant puzzle, especially if you don’t know much about the average family budget and how all the different costs add up.

Understanding that the average family budget should include not only food costs, money for utilities, and mortgage payments, but also paying off debts and saving money, will help you get a better grip on your own finances.

Child's hand is holding a white piggy bank on wooden table

According to the Bureau of Labor Statistics, the average household budget in the United States totals $61,224.

This amount is then split between different expenditures.

To help you understand just how big a financial impact various expenses have on our day to day life, I’ve focused on the most important categories of household spending.

RELATED: How To Categorize Expenses: Personal Finance Management Tips

Plus, I’ve prepared some really useful family budget tips for you, so that you can get your finances under control in no time!


Whether you are renting a property or own a home, it’s very likely that your housing expenses will take up a sizable chunk of your household budget each month.

According to the Bureau of Labor Statistics, the average American household spends around $1,674 on housing costs every month.

Since the majority of Americans have a mortgage, they have to pay interest as well.

When mortgage interest is combined with paying for repairs, maintenance, insurance, and property taxes, we begin to understand just why housing is so expensive.

In the United States, a significant number of people opt to rent a property instead of purchasing one.

According to Statista, the average monthly rent is $1,471.

But we have to remember that there are huge gaps between rents in different cities due to the cost of living.

Take New York City, for example, where the median cost of renting an apartment with two bedrooms is a whopping $3,500.

This means that while renting a property in one part of the country might be more cost-effective than owning one, the situation might be completely different in another state or region.

family of two sitting at table in their kitchen and paying bills online using laptop computer

If you think that your average family budget calendar is suffering as a result of your housing costs, here are some things you can do to make improvements.

As a rule of thumb, if more than a quarter of your monthly expenses are eaten up by rent or mortgage payments, you should start looking for cheaper options.

This is easier to do if you are renting, of course.

While moving out of an apartment that you’ve lived in for years will be emotionally hard to do, it’s necessary so that you can get on top of your expenses.

If this is something you can’t do, especially if you have a mortgage, try and see if you can refinance it.

Insurance is another area where you can save more money, so make sure to talk to your insurance company to see if there are any ways to get the cost down.

Live in a touristy area where lots of people come to visit?

You can make one of the bedrooms in your house available for rent on Airbnb, for example.

One of the best things about such websites is that you can pick and choose your guests as carefully as you would like.


Utilities also make up a sizable chunk of our monthly expenses.

Paying for water, power, heating, and so on, is not cheap, especially if you have a big family.

According to, the average cost of utilities per household is around $171 every month.

That said, utilities can vary a lot depending on your home and how big your family is. On top of utilities, many families pay for entertainment services, too.

Younger families are especially fond of subscriptions to different streaming services such as Spotify, HBO, Netflix, or Hulu.

On a monthly basis, a typical streaming subscription doesn’t seem to cost much, but these costs add up over time.

So if you’re looking to cut costs, this would be a great place to start.

On the other hand, if you’re paying for cable on top of a streaming service, canceling your cable subscription is a great way to save a lot of money.

It’s all about weighing the individual pros and cons for your family!

Going back to utilities, many families find that their bills skyrocket during the winter when they have to keep the house warm.

RELATED: How to Budget When You Are Behind on Bills: A Detailed Guide

A man with a calculator and a pile of bills

To save money on heating, try to get used to wearing warm clothing indoors and lower the thermostat.

Warm socks and sweaters can go a long way in helping you reduce costs!

You can also get a few warm blankets to snuggle up when you’re watching TV or working on your computer — fleece blankets are a great choice!

In addition, you can lower the temperature even more when you’re sleeping or away from home.

Similar principles can also be applied to reduce your water bill!

For example, try to avoid doing laundry unless the washing machine is full (this will also save money on electricity since you won’t have to switch the dryer on as often).

And when you’re doing the dishes, only switch on the dishwasher when it’s completely full.

While I know that taking a long, hot shower feels good from time to time, try to reduce long showers to a minimum to conserve water.

Child care

Parents in the US know just how expensive child care can be.

In fact, an average household might pay anywhere between $800 to $1,230 on a monthly basis for childcare, according to the Center for American Progress.

These numbers are incredibly high, especially when you factor in the costs of caring for a baby, such as paying for diapers, formula, clothes, and so on.

One of the ways in which you can lower the costs of daycare or babysitting is to talk to your company about possible work-from-home arrangements.

A group of kids learning arts and crafts in day care centre

For example, you could work from home one day out of the week.

Paying for just four instead of five days every week will lift some of the burden off your childcare costs every month.

Plus, if you have family nearby who could jump in every once in a while, you could further lower down the costs.

Grandparents could take care of your little one once or twice a week, for example.

Also, you could look into getting a nanny or a mother’s helper instead of sending your baby to a child care center.

In some states, the average cost of getting a nanny is actually a lot cheaper than paying for daycare so it’s an option worth looking into.



The transportation costs of an average American family are quite high, too.

On a yearly basis, we spend around $9,761 on transportation, which amounts to about $813 per month, according to the Bureau of Labor Statistics.

The cost of transportation should come as no surprise since Americans are very reliant on cars to get from point A to point B, especially considering the fact that public transportation is available only in bigger cities.

As a result, families end up spending large amounts of money on gas every month — the Bureau of Labor Statistics estimates $175 per month. So how can you bring these costs down?

For one, try to fill up at gas stations that offer cheaper prices.

Most of us wait until we’re running low to fill up the tank, but if you run into a station with lower prices, it’s a good idea to get gas there.

There are also many mobile apps that will help you keep track of stations with the lowest prices.

Businesswoman driving car through modern urban city with reflections of buildings

If you have coworkers who live nearby with whom you could share rides, why not suggest carpooling?

Not only will you save money on gas, but carpooling can reduce traffic and it’s environmentally friendly, too.

Plus, commuting with your coworkers can be a lot more fun than spending an hour in your car alone!

You can even carpool outside of work, too.

For example, you could talk to your neighbors about arranging a schedule for picking up and dropping your kids off at practice or after-school clubs.

This way, the entire neighborhood can save money!

Another great way to save gas is to plan all your trips ahead of time.

For instance, if you’re running low on groceries, it’s more efficient to stop by the store while you’re on your way back from the office, rather than making another additional trip.

We also shouldn’t forget car insurance, which averages $129 a month, according to

Having good car insurance is really important, especially when you have a family. But there are ways of getting good coverage without paying top dollar.

Business woman in the car examines important documents while talking on the phone

First of all, you should get quotes from various insurance providers.

Although it’s easier to find just one insurance company that you like and stick with them, you never know what’s out there until you compare them!

Even when you decide on a provider, remember to take some time every year to compare rates to ensure you’re still getting a good deal.

The key is to also consider car insurance before getting a new car.

Some vehicles are simply more expensive to insure than others, so if you’ve been thinking about a new car purchase, make sure to consider insurance, as well.


Obviously, food makes up a big portion of a family budget.

The more your family grows, the more you have to spend on food, and those restaurant outings become more and more expensive.

According to the Bureau of Labor Statistics, every year, Americans spend an average of $7,923 on food, which is around $660 per month.

Around 43 percent of this amount, though, goes towards paying for restaurant meals.

It goes without saying that if you are looking for ways to save money, cutting back on eating out is the first point of order.

Try to set aside specific days in the month when you and your family will go out to eat, and stick to it as much as you can.

But let’s be real — we all sometimes take a trip to the drive-thru even when we have perfectly good food waiting for us in the fridge, and we buy snacks and drinks throughout the day.

These seemingly small costs begin to add up over a period of time, causing a lot of us to think, “Where did all my money go?”

The problem is that we don’t think that these little things will break our food budget, but in the end, they do.

Little girl and her beautiful parents are cutting vegetables and smiling while cooking in kitchen at home

That being said, saving money on food can be done, and you might even end up with a healthier diet than before!

The first thing I would recommend to all families is to plan a weekly menu of what you are going to eat for breakfast, lunch, and dinner.

Meal prep is a good way to cut back on lunch costs and it will save you time since you won’t have to pack individual lunches every morning.

Planning ahead makes a world of difference since it reduces the number of trips you take to the grocery store and lowers the chances of buying food you don’t need!


What’s more, it will make your life a lot easier because you won’t have to think about what to cook for dinner while you’re driving home from work.

You can even keep your dinner menu posted to the fridge so that the entire family knows what to expect.

I also always suggest having a full meal before going grocery shopping, because doing so on an empty stomach will probably have you filling up the cart with snacks!

Have your shopping list at the ready and try not to stray from it too much.

Don’t underestimate the power of coupons, either, and always check your local newspaper or different websites for any sales that might be taking place.

However, the content of your shopping list matters too, so try to evaluate whether you really need certain items on your list.

If you are a family of big soda drinkers, try to see if you can cut back on this habit.

Family laughing around a good meal in kitchen

Not only will it improve your health by reducing the amount of sugar you consume every day, but it will help you save money, too.

Another option is to switch from brand-name to generic soda or replace sodas with another drink altogether.

If you’re used to buying a lot of fresh produce, double-check to see if the fruit and vegetables you would like to put on your shopping list are in season.

If they aren’t, it could be a lot more expensive than usual and it’s better to go with things that are currently in season.

Cutting back on eating meat such as beef or chicken can also result in substantial savings for your family!

Finding delicious vegetarian recipes is so easy, and you can incorporate a veggie meal once a week into your family menu.

If you’re not the biggest fan of putting together grocery lists or meal planning, there are many mobile apps aimed at food budgeting (and budgeting, in general) that can help you stay on top of your meals without breaking the bank.


According to the 2018 Consumer Expenditures Survey by the Bureau of Labor Statistics, every year, Americans spend $4,968 on healthcare, which includes health insurance costs.

What’s more, the average American also spends $7,296 a year on personal insurance and pensions.

Even though it’s expensive, when it comes to healthcare, no family is willing to jeopardize its quality.

There are ways, however, to reduce costs without getting a lower quality service.

As shown by the Bureau of Labor Statistics data, the household income in the US is $78,635 before taxes, which means that healthcare accounts for around 6.3% of all expenses.

If you find that your healthcare costs are eating up a substantial amount of your budget, there are some steps you can take to reduce the cost.

First, you should thoroughly research different health insurance providers.

While I know that buying cheaper health insurance is tempting, it might cost you more money in the end.

This is especially important for families since kids get sick quite often and require more trips to the doctor than adults.

Wood block with icon healthcare medical, insurance for your health concept

In this case, a plan with a higher insurance premium could be a more budget-friendly option, even though it doesn’t seem so at first glance.

Another budget-friendly option is to request cheaper medication from your doctor.

While this might sound strange, generic (cheaper) versions of brand name drugs go through the same rigorous testing process to be approved by the FDA but come at a fraction of the cost.

So when it comes to copays, they will be much cheaper than the copays for the brand-name medication.

Also, you should look into opening a health savings account (HSA) to reduce your medical costs.

The money that goes into this account is from your pretax income.

While not everyone is eligible for an HSA, I definitely recommend looking into it since your family might just qualify!

Clothing and personal care

With online shopping, it’s so easy to get anything you need to be delivered to your door!

But this also means we probably spend more on items like clothes since getting a new jacket or dress is just a few clicks away — all you really need is an internet connection, a smartphone, and a credit card.

According to the 2018 Consumer Expenditure Survey by the Bureau of Labor Statistics, Americans spend $768 on personal care and $1,866 (that’s around $155 a month) on clothing every year!

Kids’ clothing can especially make a big dent in your monthly budget, but there are ways to control these costs, too.

young lady standing in clothes shop indoors choosing dresses

When it comes to finding affordable baby and kids’ clothing in general, Facebook is a great place to find local moms who are selling items their kids have outgrown.

Keeping tabs on yard sales can be done on social media, too. There are even moms who are more than happy to donate their kids’ clothing!

Since little ones grow out of their clothes so quickly, I am a big advocate of buying simple, budget-friendly items at stores such as Target, for example.

You can also hit second-hand stores, which can be a real treasure trove of high-quality clothing!


When it comes to education, it costs us on average around $117 per month, which will include all those little expenses that go towards your kids’ school activities, according to the 2018 Consumer Expenditure Survey.

According to Experiean and the Federal Reserve, 14.4 percent of adults in the US are paying off student loans.

Woman hand holding stack of coins money and glass jar with full of coins

This means that a considerable number of parents are making payments towards their student debt as well.

If you are paying off multiple student loans at the same time, the best strategy is to first start making payments towards the loan with the highest interest.

RELATED: The Art Of The Debt Snowball Method And How It Works

But you can also look into extended repayment, which will allow you to make payments for a longer time period (20 years instead of 10, for example).

Emergency fund and retirement savings

Having an emergency fund and a sinking fund in this day and age should really be a no-brainer.

If you have a certain amount of money set aside for a rainy day (or a month or two), it will prevent you from going into debt or taking out high-interest loans which can only hurt you in the long-term.

But how much money should go into your emergency fund?

A good idea is to have enough money to last you for at least 3 months, but this will depend on how big your family is and where you stand in the income bracket.

Emergency fund in the glass jar with cash

Even a few hundred dollars is better than having nothing saved up in case of an emergency. You can start small and work your way up towards higher payments every month.

You should also approach your retirement plan with seriousness, too.

Every month, Americans make average payments of around $569 towards their Social Security and other retirement savings accounts, according to the Bureau of Labor Statistics.

There are many different retirement plans out there for your consideration, but it’s always a good idea to save at least 15 percent of your salary and put it towards your retirement fund.

All in all

As you can see, the list of important expenses is long!

And I haven’t even covered all areas of household spending, just the key ones.

Now that you understand how big of a portion specific spending categories take out of your budget, you’ll be able to better understand how to manage your own money.

For example, you might not be able to reduce your mortgage payments, but you can take a look at how much you spend on your food and see whether there is room to reduce expenses there.

Plus, there are numerous mobile apps on the market that can make sure you stay within your budget.

I hope you were able to learn new things about the average family budget and that you have discovered new ways of saving money for your family!

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