The Average American Household Spent $72,967 in 2022: How Do Your Annual Expenses Compare?

The U.S. Bureau of Labor Statistics (BLS) just released their latest Consumer Expenditure Survey, which shows how the average American household spent $72,967 in 2022. That’s the equivalent of spending $6,081 per month.

How does your household spending compare?

Comparing your expenses to that of the average American household can help you determine if you are spending too much (or too little) in any one area. It’s also a great resource if you are just starting to build a budget.

It’s important to remember that most Americans don’t have their finances under control. If financial independence is what you’re striving for, you might not want to aim for “normal.”

Nonetheless, it’s always interesting to see how our budget lines up with others.

So, let’s take a deeper look at this year’s survey and how the average American household spent $72,967 last year.

Inflation continues to push household spending higher: Americans spent 9.0% more in 2022!

And that’s after last year’s average increase of 9.1%. Rising costs of over 18% in just two years is no joke!

Wages increased by more than in recent years, but still not enough to keep up the increase in spending levels. The average household income of survey participants was $94,003 ($83,195 after income taxes) for 2022.

One small silver-lining of the pandemic was that savings rates briefly increased, as we saw a reduction in average spending despite relatively stable income levels. However, since then spending has only increased.

Here are the survey results for average annual household spending for the past four years.  

Over the past two years, life has returned to normal for most people and inflation has been growing at uncontrolled rates. The Consumer Price Index (a measure of inflation) rose by 8.0% over the same periods. For context, average income before taxes increased by 7.5%, over this same period of time.

Of the 14 major categories examined in the study, only one experienced a small decrease in spending during the current year: Entertainment (-3.1%). The rest of the categories had increases ranging from 7.4% to 14.1% when compared to 2021.

Annual percent change in expenditures and selected components, 2021-22

What is the Consumer Expenditure Survey?

The Consumer Expenditure Survey is updated annually by the BLS using data gathered from individuals who agree to participate and provide detailed information on spending for public benefit.

This information is generally collected via confidential phone interviews or through completion of a diary survey in which every purchase is recorded over a short period of time. The relevance of this survey is at the mercy of willing participants, a sample of 134,000 households in America.

Data included herein is from the 2022 survey on average American household expenses which was released on September 8, 2023, unless otherwise noted.

According to the BLS, a household or “consumer unit” includes “1) all members of a particular household…; (2) a person living alone or sharing a household with others …, but who is financially independent; or (3) two or more persons living together who use their income to make joint expenditure decisions.”

The average consumer unit in the most recent study had 1.9 vehicles and included 2.4 people, of which 1.3 were earners, and 0.6 were children. Additionally, the average head of household (“reference person”) was 52.1 years old. These attributes are consistent with those from recent surveys.

Additionally, the survey slices up the data in various ways, including make-up of “household” unit and income levels if you’re interested in a more direct comparison to your situation. Although, many of the trends were similar across groups.  

Average American Household Expenses by Category

Here’s a breakout of where Americans spent their money in 2022, including a comparison to expenses in 2021.

Consistent with recent years, the top three categories were: Housing, Transportation, and Food. We’ll go into further detail for the larger categories in the sections below.

Housing – $24,298

As you might expect, housing has been the largest expense of the average American household for the past several years. In the most recent survey, housing amounted to $2,025 per month. That’s an increase of 7.4% when compared to the previous year.

Housing costs include shelter, utilities, housekeeping, maintenance, and furnishings. It represents nearly 33% of the average annual expenditure!  

You can dig into the spending details within the report; however, the breakdown of the ‘shelter’ portion of expenses is a bit skewed. This is because the BLS survey report averages expenses across all households surveyed.

As you might expect, some families are renters while others are homeowners. Additionally, some homeowners have a mortgage, while others own their home free and clear. Because these different populations are all combined into the average, the dollar spending amounts in the subcategories for ‘owned’ vs. ‘rented’ properties is diluted and less representative of true housing costs.

Nonetheless, the combined expenses for renting and owning ($13,220) appear to be a better representation of average shelter costs. This total is still lower than I would expect to see on a per household basis.

Additionally, if you’re trying to compare to your own housing costs, it appears that mortgage principal payments are not included in housing expenses, while interest and property taxes are included. This is similar to how we view mortgage “expenses” in our own budget. The survey also views the purchase of furniture and household items within this category, which we would not typically view as housing expenses.

Shelter also includes ‘Other lodging’ ($1,287), which is primarily out-of-town lodging. Although not significant in dollar amount, this sub-category has continued to climb year after year. I believe out-of-town lodging would be better reflected as a ‘Vacation’ or ‘Travel’ expense. However, the survey doesn’t have a subcategory for vacations, and includes all travel costs within the line items they best fit.

Why you should spend less on housing

Since most housing related costs are fixed (i.e. property taxes, mortgage) and/or out of your control (i.e. repairs), housing is an important category to manage if you’re trying to save more money. 

A good rule of thumb is to spend no more than 30% of your take-home pay on housing and related expenditures. However, if you’re pursuing financial independence, you might want to aim even lower.

Housing-related costs, as defined by this survey, typically make up around 20% of our budgeted expenses. However, these costs make up a much smaller percentage of our take-home pay.

Keeping fixed costs low helps us to keep our savings rates high. It also offers better financial flexibility and peace of mind for when things go wrong. 

Transportation – $12,295

According to the survey, transportation is the second highest expenditure for the average household at $1,025 per month.

Transportation costs include gasoline, public transportation, vehicle rentals, and other lumpy expenditures, such as new vehicle purchases.

Consistently within the top three spending categories, transportation spending increased by 12.2% in 2022. That’s after this category saw an increase of 11.6% last year, for a total cost increase of nearly 24% in just two years!

Inflation has clearly been impacting this category, as the costs for new and used cars remained elevated throughout 2022. Similarly, the mandated return to office work has reduced the number of people working from home.

You can keep your transportation costs down by properly maintaining your vehicle and driving it to the ground. If your life situation allows, you can save even more by ditching a vehicle in favor of carpooling, walking, or biking more often.

Food – $9,343

Food is the final category in the top three and represents 12.8% of the average American household’s annual budget at approximately $779 per month.

Although this category decreased by 10% in 2020, spending has dramatically increased since then, with an increase of 13.4% in 2021 and 12.7% in 2022.

Consistent with last year’s survey, the biggest increase in this category was with regards to food consumed outside of the home.

Spending on food eaten away from home in 2022 was $3,639, an increase of 20.1% as compared to 2021. These costs also rose by 27.6% in last year’s survey. It seems that dining out has finally recovered and surpassed pre-pandemic levels.

Dining out is one of the biggest areas we cut back on once we got serious about pursuing financial independence. We didn’t do it to sacrifice, but because we finally realized how much money we were wasting on crappy, convenience take-out. By making more meals at home and saving dining out for special occasions, we’ve saved a ton of money and enjoy the experience more.

Despite dining out less than the average American household, we still spend a little more on food (our 2023 budget is $9,500). This is because we gladly splurge on organic and specialty foods. Overall, we’ve still reduced our food expenses since beginning this journey.

Personal Insurance & Pensions – $8,742

The average American household spent $729 per month on personal insurance and pensions, which represents about 12% of total spending.

While this category includes premiums for life insurance, personal liability insurance, and disability insurance, the bulk of the spending (approximately 94%) relates to Social Security contributions paid by employees; government retirement and private pension programs; and retirement programs for the self-employed (does not include company 401k plans).

The good news is some of this category represents actual savings rather than spending. Let’s increase savings and take advantage of every retirement program we can! 

Healthcare – $5,850

Healthcare represents 8% of average household spending at $454/month, which is 7.3% more than last year.

Of this amount, approximately 66% or $3,843 went towards health insurance premiums, which only experienced a slight increase in 2022.

The remainder covers everything else, such as hospital charges, doctor’s visits, eye and dental care, lab tests, nursing homes, and prescription drugs. Medical expenses saw an increase of 10.7% last year.

Going without health insurance is gambling with your finances. Please don’t do it! Even if your budget is tight, health insurance should be a priority.

Entertainment – $3,458

The entertainment category is the only category which experienced a decrease in the most recent survey, albeit a small one. However, this decrease comes after the massive 22.7% increase in spending observed during last year’s survey.

Spending for this category averaged $288 per month.

The Entertainment category includes fees and admissions (i.e. Disney World), pet care, toys, television, hobbies, and other entertainment services and equipment.  

After rising 53.9% in last year’s survey, the ‘Fees and admissions’ subcategory saw a further increase of 27.4%. However, this increase was more than offset by a significant decrease in the ‘Other entertainment supplies, equipment, and services’ subcategory.

Everything Else

We discussed the largest categories of spending above; however, the remaining expenses consist primarily of cash contributions (i.e., alimony, donations); apparel, education, personal care, alcohol, and tobacco products, among other categories.

As mentioned above, pretty much all categories saw increases in spending for 2022, which most of us would expect given how frequently inflation has been discussed in the headlines over the past two years.

As a lover of craft beer and fine wine, it’s always interesting to see how our spending compares to the average in the ‘Alcohol’ category. Although we’ve reduced our alcohol budget quite a bit in recent years, we still spend 2-3x that of the average American household ($583). But that’s what value spending is all about.

Want to learn more? You can see further descriptions of the various categories in the CE Glossary. You can also view the full report HERE, which includes additional breakouts of each of the categories and more data than I could fit in this blog post.

If you want another point of comparison, check out our household’s spending each month here on the blog.

So, how does your budget compare to the expenses of the average American household?

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Featured image by S K on Pixabay

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