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What Should Be the Biggest Expense in Your Budget?


From groceries and daycare to gas and utilities--where does it all go and how can we keep our expenses within budget? Tracking and budgeting overall expenses day to day can be a daunting challenge--it's $200 here for the water bill or $300 a week in food. Unless you write down and track every penny you spend, pinpointing where most of your money goes can be tough. However, financial data company Visual Economics examined the average household and identified where the majority of our money goes and how we budget our expenses. 

Biggest Expense

The biggest expense is housing. This is not a surprise, as the majority of us spend an average of 34.1% of our annual budget on mortgage payments or rent. In fact, housing costs far exceed any other expense the typical American family experiences each year.

This percentage is based on averages and breaks down accordingly:

  • Overall, an average of $16,920 is spent on housing
  • An average of $10,023 is allocated toward paying rent or a mortgage
  • $3,477 goes toward monthly utilities and public services
  • $984 is spent on household operations such as cleaning services, lawn or pool care
  • $639 goes toward cleaning and housekeeping supplies
  • Only 3.6% of the housing expenses is allocated toward furniture and household equipment


Americans love their cars and budget to purchase and maintain them. Approximately 17.6% of the annual household budget goes toward some kind of transportation expense. Approximately 6.8% of that figure is spent on a new or used vehicle purchases or leases. Heightened gas prices take a 4.8% chunk from the budget and 6.3% of the transportation budget goes toward having the vehicle maintained.

Other Necessities

Healthcare, insurance and pensions are other priorities to many Americans. Currently the average American spends $2,853 of her budget on healthcare, equating to 5.7% of overall annual expenses. On average people allocate $5,336 a year toward insurance, social security and pensions and only $309 toward personal or life insurance.

Food expenses--both grocery and restaurant--make up approximately 12.4%, with the majority of us opting to eat mainly at home. Behind food is entertainment, which consumes 5.4% of our household annual budget. 

Rounding out the bottom of the list include:

  • Clothing and apparel eats 3.8% of the average American's budget
  • 3.7% goes to cash contributions
  • Only 1.9% is allocated toward education
  • About $808 is spent on miscellaneous expenses such as gifts and incidentals
  • Tobacco and alcohol consumption exceeds the need to read.  1.6% is spent on partying and only 0.2 on reading

There it is--broken down in black and white. How does your family stack up to the average American?


Gina Ragusa is a freelance writer and mom from sunny (and sometimes not) South Florida. Her 15 year experience ranges from writing about banking to tattoo parlors. Read more about her adventures at

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