What percent of my income should I spend on housing, clothing, food, and so on?

There is no “right” or “wrong” amount to spend on a given expense area, just as there is no “average” family to compare with your family. Average living expenditures are a composite from many individual families. Your own family’s goals, values, and stage in the family life cycle greatly affect the way resources are allocated. American spending patterns have also changed a lot over the last few decades with a lot more money being spent today on telecommunications services.

Food expenditures used to consume nearly one-fourth of family income. Today that proportion is less than 15 percent for many households. Housing expenditures (rent or mortgage payment) have increased from approximately 13 percent of household income in 1960 to nearly 30 percent for most household types today (and even more in high-cost areas of the country). Transportation expenses have also gone up, from 15 percent of the family income in 1960 to more than 20 percent today for many families. In addition, the amount historically spent for family living varies significantly among urban, rural, and farm families. Farm families, for example, spend a greater percentage of their family expenditures on medical care and health insurance than do other families.

Regardless of these differences, it can be helpful to take a look at average figures for family living that are available. Comparing your spending to the average can help you determine reasonable limits for your family expenses and what areas to look at if some trimming is necessary. A good resource is Consumer Expenditure Survey graphs that describe what people across the country spend on various household expenses. See www.bls.gov/cex/. Click on Consumer Expenditures Reports.

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