Do you know how much you’re spending? The most basic rule of budgeting is not to spend more than you make, but it is also important to know what you’re spending most of your salary on. Many people never sit down to take a close look at what their paycheck is going toward. With the plethora of budgeting tools available online, tracking expenses has become much easier.
Where Does Your Paycheck Go?
The bulk of an average American’s paycheck goes toward housing. Americans spend an average of $16,920 on rent or mortgage payments, accounting for 34.1% of expenses, according to Visual Economics. The average American household (2.5 people) brings in $63,091 before taxes. The total average annual expenditures figure was $49,638.
Other expenditures include:
- 0.7% toward tobacco, approximately $323 a year.
- 17.6% for transportation including gasoline as well as vehicle purchases. This comes to a net total of $8,758.
- 0.2%, or $118, for reading materials.
- 3.7% in cash contributions, accounting for $1,821.
- 5.4%, or $2,698, for entertainment.
- 12.4% goes towards food. This figure is broken down as $3,465 spent at home and $2,668 is spent at restaurants.
- 0.9% of the paycheck goes to alcohol — approximately $457.
- 10.8% goes towards insurance pensions, totaling $5,336. 0.6% of that percentage goes towards life and other personal insurance.
- 1.9% ($945) for educational purposes.
- 3.8% for clothing, which accounts for $1,881.
- 1.2% for personal care such as makeup, skin cleansers and other personal care services.
- 5.7%, or $2,853 is used for health care.
- 1.6%, or $808 is used for miscellaneous purposes.
It is important to know what you are spending your money on. This will help immensely when preparing a budget. Without seeing a concrete figure, it is easier to spend money that you shouldn’t be spending. By adding your expenses up you will be more conscientious about how you handle your money. For extra money management help, check out this article on the seven top uses of money management tools.