George Kamel - Average Monthly Expenses (How Do You Compare?)

Episode Date: November 20, 2024

💵 Start your free budget today. Download the EveryDollar app!   Between rent increases and $7 cereal, anyone else feel like your monthly bills are more than they used to be? In this episode, find out how your monthly expenses compare to the average American and the key to creating financial margin regardless of your income.  Next Steps:   🎥 Watch my video Budgeting For Beginners | The Only Budgeting Method You Need To Worry About!  Connect With Our Sponsors:  🔒 Get 20% off when you join DeleteMe  💸 Learn more about opening a high-yield savings account with Laurel Road  📱 Visit Tello for more details.  Explore More From Ramsey Network:  🎙️ The Ramsey Show    🍸 Smart Money Happy Hour  💸 The Ramsey Show Highlights  🧠 The Dr. John Delony Show  💡 The Rachel Cruze Show  💼 The Ken Coleman Show  📈 EntreLeadership    Ramsey Solutions Privacy Policy  Learn more about your ad choices. Visit megaphone.fm/adchoices

Despite the endless Italian vacations and designer doodles you see floating around on Instagram, money is tight for a lot of people right now. And as you look for ways to cut costs, you might have found yourself wondering, is everyone spending this much on life? That's why in this video, we're looking at what Americans spend on monthly expenses, so you can see exactly how you stack up. Plus, you're going to find out how to get financial margin in your budget no matter your income, which is the ultimate game changer for building wealth.

You know what else is a game changer for building wealth? This YouTube channel. So before we get going, go ahead and hit those like and subscribe. buttons to let the algorithm know you're all about those gains financially. Although I do watch a lot of protein videos, I don't know why. I'm not going to eat that much protein in a day. What, where are you guys getting this much protein? In this economy? So what we're looking at are the average monthly expenses for an American household. Some households will be way more, some way less. But on average, American's total household expenses are about $6,440. And that adds up to just over

$77,000 per year. So not to state the obvious, but if that's what you're spending and your income falls short, you're experiencing what us in the biz call a deficit. No one says that. There's no biz. I just wanted to sound cool. Didn't work. Let's keep going. And for reference, I didn't pull these numbers out of my thin air. Okay, I pulled them from the Bureau of Labor Statistics, the BLS, and they keep track on what Americans are spending on everything from frosted flakes to triple ply Charmin, if that's what fluts your butt. What was that? Now remember, these are averages, so they could vary a lot based on your type of household and the cost of living where you're at. So just to get a little clearer picture,

here's how it breaks down between different household types. A single person household spends about 4,640 on monthly expenses. Married couples without kids spend about 7,390 on monthly expenses, and a family of four spends between $8,500 and $9,800 on monthly expenses. Depending on the kids' ages, of course. We all know the havoc that pubescent humans can wreak on your grocery budget, descending on the pantry like a plague of locusts. Total devastating. Gotta get that protein, though. Protein. Protein. Protein.

Protein. Now, these numbers give us a big picture idea of what our expenses might total up to in any given month. But what exactly are we spending all of this money on? Well, let's look at the 10 major categories of household living expenses. Again, keep in mind, averages, not necessarily what you should spend each month. Starting with housing. Keeping a roof over your head costs a lot of dough. Not to mention, the cost to do so went up 4.7% in 2023.

And that's why it shouldn't really be a surprise that the big expense for pretty much everyone is housing, which costs on average $2,120 per month. When I say housing, I'm not just talking about your rent or mortgage payment. It's that, plus property taxes, homeowners insurance, home repairs, utility bills, and furniture, apparently. I mean, you've got to have your semi-annual trips to IKEA, and you know the slogan, come for the Nordvecan dining table and stay for the meatballs. They're authentic. Straight from, I think they import them from Sweden with the furniture. It all just comes together. Meatballs with the, you know, plywood.

Mmm, so good and tasty. So if you don't want to be house poor, which basically just means you're spending too much money on housing, keep your housing costs at no more than 25% of your take-home pay. For example, if your rent is $2,000, your take-home pay would need to be about $8,000 every month in order to avoid becoming house-poor. That way, you can actually enjoy your home instead of stressing about how to afford it or sacrificing other financial goals to do so. The next expense on the list is transportation, coming in at an average of almost $1,100 per month.

This includes airline tickets, gas, auto insurance, repairs, and here's the big one, car payments. Now, unless you're Taylor Swift, you're probably not taking a plane to get to the office. So we love our cars in the good old USA. In fact, the average monthly payment for a new car is now $735. You want a secret to cut your transportation costs in half? Get the car payments out of your freaking life and pay cash for a reliable used car instead. That's all I'm going to say about that. Moving on.

Food is the next highest monthly expense, no surprise there. costing us on average $832 per month. And that includes food at home, which we spend about $504 on, and food away from home, which comes out to about $328. So whether you're making Swedish meatballs at home or you're getting them at Scandinavian furniture stores, it's going to eat up your budget. Here's a pro tip for you.

If you need to lower your food budget, start meal planning. When you plan out your meals before you head to the grocery store, you're more likely to only buy what you need and you skip those impulse purchases like the party-sized Cheeto puffs when we both know, There's no party, bud. All right, put the bag down, Brandon, back away slowly. She would probably be surprised to know that I spent a lot of time alone.

And having this meal plan will also keep you for making an expensive trip to the Mexican joint down the street because you just didn't know what to make for dinner, but you knew you needed guac. So how about this? Try a new Mexican restaurant in your own home. It's called mikasa. It's a culinary experience where you cook your own dang food.

Your mom doesn't work there. Make yourself a dang cassidilla. Five. Next up, at almost $800 per month, personal insurance and pensions is the next expense category, which actually increased 9% from 2022 to 2023. Now, what the heck does personal insurance and pensions mean? Well, personal insurance is basically another name for life insurance, which is about $46 a month for the average American.

And that leaves about $750 per month going toward those pensions, which may seem random, since most non-boomers don't have a pension plan. But that's because the BLS lumps the Social Security tax into the $1,000. this category, and that's a 6.2% tax that comes directly out of your paycheck. And speaking of insurance, it's time for everyone's favorite expense category, healthcare costs. That's fantastic news. Before we get to that number, let's talk about how to care for your digital health with one of the sponsors of today's video, Delete Me. Because when it comes down to expenses that are worth it, protecting your personal info online,

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So head over to join deleteme.com slash George and you'll get 20% off their plans and you'll start protecting your privacy today. You can also check out the link in the description below. Another recurring expense that everyone has but didn't make the list is your cell phone plan. Now most people pay big name cell providers way too much because they just don't know,

there's better options out there. like TELO. TELO is a great way to save money on your cell phone plan while getting the same reliable coverage as you would with the big guys. And that's because TELO uses T-Mobile's towers. And their plans start at just $5 and you can get the unlimited plan for just $25.

Plus, there's no contracts, no sneaky fees. So go check it out and you'll get an extra $5 off your first month of unlimited if you go to tello.com slash George or click the link in the description below. Okay, back to your actual health. American households spend an average of $513 per month on health insurance. And that includes your premiums and your out-of-pocket costs for medical services, prescriptions, and the melatonin gummies you give your toddler before car trips.

No judgment, but don't do it if they're under three. Pretty sure that's illegal. Oops, too late. Now, this is a pretty big line item for most people, especially if you have kids in the mix. Not to mention, healthcare costs went up by about 5% last year. Next expense on the list? Entertainment. Americans spend about $300 a month on entertainment. And no, that doesn't even include what it cost to buy raisinets

and tickets to the latest way in the Rock Johnson movie, which you know I will be seeing regardless of the tomato meter, or for our friends across the pond, tomato meter. Entertainment also includes TV, streaming services, your current pickleball obsession, and your pets. I don't know. Your dogs might feel like family, but they're technically a form of entertainment,

which, if you've met my French bulldogs, makes so much sense. Okay, the next category is what the BLS is calling cash contributions, which comes out to about $200 bucks per month. Charitable Giving is a big part of that, but it also includes alimony and child support payments, which doesn't feel like all those things should be lumped together, but I'm not here trying to change systemic socioeconomic issues,

just reporting the facts. Staying out of it. Stay in your land, bro. Any money you spend on room or board for a college student can also be lumped into these cash contributions, regardless of whether that kid shows up for their 8 a.m. British lit class or not. And not so, fun fact, this category actually decreased by almost 14% in 2023, which is absolutely not the goal,

since charitable giving is one area where I recommend being above average. In fact, I tell people to make giving the first line item in their budget and set aside 10% of their income for it. Controversial, I know. Get in line, buddy. Get a ticket at the deli counter if you want to razz me. Leave it in the comments so I can go delete you and block you.

Please, no, anything but that. Next up, American household spend on average $170 on clothes and other services per month. But this could vary a ton based on the size of your family and whether or not you have a DJ-Callad-level addiction to Jordans. And since we're on the topic of shoes, the average monthly amount for footwear is $37. Now, for education, Americans spend on average $138 per month. And before you freak out on me because you're dropping a butt ton of money for your kid to major in eco-linguistics at the University of Alabama, remember, this is an average of all Americans.

So if you're paying for a kid or kids to go to college or a private school, this expense is going to be way higher. In fact, the average cost of college tuition for an in-state school is $938 a month, or over $11,000 a year. And good luck making $938 with your eco-linguistics degree, Benji, which, if I'm not mistaken, ecology and linguistics, so talking to your pet rock, good luck. Although, probably there's a Twitch streamer out there who does that and makes a billion dollars, so egg on my face. And to wrap up, we've got the catch-all category for other expenditures, coming in at over $270 bucks per month.

And for me, I assume this includes things like my hair pomade, my car wash subscription, a copy of the book Everyone Poops for my daughter, and a small batch bourbon to share with my wife. And of course, the miscellaneous items that somehow find their way into my shopping cart at Target. And this category is like that junk drawer in your house that collects scissors and loose change and gum wrappers and way more rubber bands than you'll ever need in a lifetime. And often, this is the category where people can cut the most items. And hint, one of them rhymes with shlaughtery schtikins.

Probably could have come up with a better rhyme, but you're not worth it. But you know what the Bureau of Labor Statistics forgot to add to the list of monthly expenses? Debt payments. Unfortunately, for most people, it's a monthly expense they need to account for. considering the average American has almost $67,000 of debt. That's a huge chunk of people's paychecks going to debt payments and lenders every single month on top of everything else we've already covered. Now, if these expenses seem high, it's because they are.

Prices on just about everything have gone up in the last couple of years. And as of August of 2024, the annual inflation rate for all items was 2.5%, with food up 2% and housing up 5%. But here's some good news. The price of gas went down 10% and the price of cars and trucks also down by 10%. year over year. So not all hope is lost. Moral of the story is that for most things, you got to spend more money to keep your same standard of living, which sucks. I will give you that. But regardless of what inflation and the economy is doing, you can build wealth. And the key to

that is living on less than you make. That is the only way to create financial margin. And that means the goal is not to spend as much as the average American. The goal is to spend below average and below your actual income. Why? Because average is broke and living paycheck to paycheck. Normal sucks. And if your paycheck is not, adding up to your monthly expenses, the chances are you're going to go into debt further and further every single month. Now, I get that you have to take care of the family, but don't just complain that your expenses are too high and use that as an excuse to stay in debt and make zero progress. Make the sacrifices you need to create margin and get ahead with money. It's not always going to be

fun, but it will always be worth it. Now, I believe that everyone, no matter to their income or wealth level, needs to be following a budget. But if you legit can't afford your living expenses or you have no idea what your actual expenses are, you need one like real bad. It's going to help you plan and visualize every expense as well as show you where you can cut back to get more margin and it might show you you need to go make more even if that's with some side hustles and again margin is the secret sauce for building wealth but what's the best way to budget and get some financial margin we'll keep watching this next video to get the total breakdown on how to budget or check out the link in the description below and let me know in the comments how your expenses compare

to the average persons i want to know dark curiosity as always thanks for watching we'll see you next time