Each year the Bureau of Labor Statistics (BLS) conducts a massive survey in order to answer one fundamental question: How Do Americans Spend Their Money?
However, I wanted to take this question one step further and ask: “How Have American’s Spending Habits Changed Over Time?”
The end result? Three data visualizations examining the following:
- Average American Household Income and Spending
- U.S. Consumer Spending Habits by Budget Category
- Long Term Average Spending by Budget Category
I also included two bonus visualizations for fun, comparing my budget to the average household’s budget.
Let’s dive in!
Note: The data visualizations are interactive; hover over sections of the graphs for more detailed information.
Average American Household’s Income and Spending
Not adjusting for inflation, the average American household’s income before taxes rose from $43,951 to $82,852 or an increase of 88.5%.
Not adjusting for inflation, the average American household’s average annual expenditures rose from $36,995 to $63,036 or an increase in 70.4%.
U.S. Consumer Spending Habits by Category
Despite consumers spending more overall, the percentage of money spent on each budget category annually has remained relatively unchanged over the last 20 years.
What immediately stood out to me was that Education, Tobacco, and Personal Care as a percentage of a consumer’s annual budget have never changed.
Furthermore, consumer spending on the big 3 expenses (Housing, Transportation & Food) have only fluctuated by at most 3%.
Note: If you are wondering what the BLS includes within each budget category, you can check that out here.
Long Term Average Spending by Category
Over the long term, the average spending breakdown for American households is as follows:
Bonus Graphic #1 – TVM Long Term Average Spending by Category
When I started recording and categorizing my expenses, I did not think to align it with the definitions that the BLS uses. Therefore, I unfortunately can’t make a 1:1 comparison.
Regardless, here is a snapshot of my average spending by budget category for three complete years:
Bonus Graphic #2 – Top 3 Expenses Analysis
While I categorize most of my expenses differently then how the BLS does, I do measure the big 3 expenses the same way!
Overall, I spend 7.5% less on Housing, Transportation and Food compared to the average household. This has made a huge impact on my path to financial independence.
Here is how my spending on the big 3 expenses breaks down relative to the average household:
Final Thoughts
I was honestly surprised to see this level of consistency with how Americans have spent their money over time.
For those pursuing financial independence, this data can serve as a good baseline for understanding how your finances look relative to the average household.
When calculating my own progress to financial independence, I know that spending 7.5% less on the big three expenses has resulted in years off my goal of retiring by 40.
How close does your budget compare to the average households?
Thank you for reading! 🙂
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