One of the prevailing thoughts is to refrain from comparing yourself to others, financially or otherwise. I know that in my own case, it most often makes me feel worse about myself, as I feel far less successful than I should be. It does not help that many guys who I grew up with who I was always “smarter” than are self-made millionaires while I take orders from a millennial who knows less than half of what I do.
Score one for the notion that the smartest guys do not always become the wealthiest or most successful. Many a graduate student or degree holder has served many who never went to college in many a fine dining establishment.
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So when I came across the extremely light reading of “How does the average American spend their paycheck?” by Matthew Frankel on the Motley Fool website (one of about two hundred that I follow), I clicked on that bait.
Reading through it, it made me once again realize that I earn and spend a bit more than the average American. He cites the average American household’s pretax income at nearly $75,000, which is about thirty-five grand less than my own income. My wife adds about $7,500 in income from part-time work and we make another five grand or so in dividends, but reinvest all of those. I make around a grand on selling some eBooks and always intend to self-publish more, but always procrastinate and don't.
Altogether, my household's pretax income should be just over $120 K this year should I remain gainfully employed.
More interesting was the citation of the latest BLS data regarding categories on how the average household’s salary is spent.
Some I just kind of chuckled at, some made me feel good that I spent zero where others spend hundreds. Others reinforced the notion that us Illinoyed folks are getting taxed up the wazoo.
Following is a down-and-dirty analysis of my own family’s expenditures in relation to the BLS report.
However, although this is written by me and about my family's spending, it is meant to get you thinking about yours.
Food
$7,203 is way below what my own family spends.
Granted, we are fairly big eaters and my wife probably buys higher quality products than others in our income bracket would. But who am I to quarrel with that? I am a Jewish mensch, or at least I strive to be.
My wife and/or I would never buy the 80% lean beef at the supermarket because it’s way cheaper than the 90%. Nor would we buy the fake sugary juice that really only has 10% real juice. We do our best to avoid processed foods.
I know that there are quite a few months when we spend over $500 dining out between the four of us. Heck, I took my son out to dinner just a few hours ago after picking him up after work from his college to take him and much of his stuff home this weekend. As I write this, my wife is out to dinner with our daughter and her BFF at Applebee's in celebration of BFF's birthday. That's about a hundred bucks on dinner out tonight alone.
I think that my own family’s food spending exceeds that average by about ten grand.
Alcoholic Beverages
While not a huge average cost, $484 is more than we spend on this item.
Loosely, that amounts to just under ten bucks per week which, granted, is not so much when it comes to booze. One trendy cocktail at a finer establishment in my neck of the woods could cost you at least that much.
Overall, I purchase a six pack of better beer per month. Not some high falutin’ craft beer at ten or twelve bucks for six bottles, but something along the lines of Shock Top, Blue Moon, Leinie’s or some variety of Sam Adams. I am consuming my last Shock Top in last month's six pack as I write this and since I am writing about our low alcohol spending, now I feel like I cannot buy another one until June rolls around.
I only drink with others at bars occasionally, perhaps three or four times per year. I purchase bottles of wine at Aldi or Trader Joe’s for about three bucks each.
We are not way below the $484, but probably in the $300 or so range, about six bucks worth of booze in an average week. Some weeks thirty spent and then four weeks of zero.
I will probably drinking my fair share, most of it free, while attending four different cocktail parties in Las Vegas in a little over a week as my town's mayor, my boss and I attend the big ICSC RECon show. All four soirees that we have been invited to are open bar, but a dude like me would tip the bartender at least a five spot upon my last cocktail.
Housing
The BLS data had a number just around $19,000, and it amazed me when I added up my mortgage payments ($9,600), property taxes ($5,400), homeowners insurance ($1,000) and utilities ($3,600) to find it at nearly exactly that amount.
However, when they throw in household services, new appliances, repairs and the like, we have to tack on at least another few grand in our case.
I just hired a lawn mowing service this past week, which is money very well spent in my book.
We have been replacing nearly everything of late including both furnaces and our air conditioning unit. Our hot water heater is currently on the fritz and will soon need replacement.
For my own family, we would probably have to tack on an additional two to four grand on average.
For us to maintain our middle class existence in the northwest burbs of Chicago, our housing cost comes out to about two grand per month, and that is for a very modest home indeed.
Apparel and services
Our apparel costs used to be much lower than the average $1,803 or $150 per month.
That was before our fashionable, well-liked and high achieving daughter reached high school age. To keep her in style, plus the new outfits and shoes that she constantly purchases for poms, easily surpasses that amount.
Likewise, our son is a musician in several bands, orchestras and symphonies at the college that he attends plus an additional band that he now plays in with actual tax-paying adults. We often upgrade his attire including dress shirts, ties and the like.
Adding some new work clothes for yours truly lately and two nice pairs of shoes, we have most likely surpassed the $1,803 number in 2018 and we are not yet halfway through the year.
Transportation
The average transportation spending number of $9,049 looked high to me at first.
Later, after calculating the lease payments that I make on my wife’s new Subaru, the insurance payments that we make on both cars, the gasoline that we keep buying at nearly $100 worth per week and the repairs that I have had made to my current old minivan and the two clunkers that I moved along recently, I realize that the $9,049 is pretty accurate when it comes to what we spend on transportation.
Add on air fare to our family’s increasing travels, and we most likely exceed that number by one or two thousand.
Health care
At $4,612, this is also right in line with what we spend. And that is for a healthy year. Throw in a major illness, and that number goes much higher.
Sure, my family is covered by Blue Cross Blue Shield HMO, which does cover most of our medical expenses, but my employer continues to tweak coverage to the point where our co-payments are about forty bucks a pop to go see a doctor.
I just looked it up, and I have $200 deducted from my paychecks every month, which is only about 15% of our coverage’s cost, as well as $500 for dental.
Besides the doctor visits we have gone on and co-payments for various prescriptions, our family’s biggest spending over the past two years has been about $1,500 spent each of the last two years on me finally getting the dental work that I needed to get done, done.
Unfortunately, my son had been hospitalized a few times and I can assure you that after paying everything that we were on the hook for, we spent a bit more than that $4,612 for several of the recently passed years. We hope and pray that those issues are behind us.
I suppose that the ten thousand dollars in orthodontia payments for braces for our children made over the past four years would fit into this category, as well.
Personal care products and services
$707 is a bit low for us, but God only knows by how much.
Have you ever bought a make-up kit for a teen-aged girl before a dance competition?
Have you ever paid for someone’s hair to be colored by a stylist?
Do you know how much organic shampoo infused with avocado costs?
I used to go to Massage Envy and spend about $80 for a one-hour massage. Like paying the lawn service, it was money well spent. I could go for a nice massage right now, since my entire body is sore. And I do not mean a "happy ending" massage that so many guys my age and younger love to joke about. I want someone to massage my ankle that is killing me right now and would gladly pay someone to do so.
Yeah, we definitely spend more than $700 a year on personal care and products.
Entertainment
When all the movies, concerts and in-home entertainment costs for my family are added up, I think that we are within about ten percent of the $2,913 average.
The BLS Consumer Expenditure Survey included pets in this category, so because we treat my little sweet baby more like the Princess that she is than a pet (I hope that she did not know that I referred to her as a pet), we most likely exceed this amount by about $500.
Reading
I don't really want to address this one, although I am vastly improving.
From 2015 through 2017, I probably purchased over one hundred books per year. New, used, at Half Price Books, at library book sales, at independent book sellers, on Amazon, at Barnes & Nobles, at college bookstores, wherever. If there was an interesting looking book and I had some cash on me or money in my bank account, I bought it.
So let me clarify about the $118 average for reading. I most likely quadrupled that amount for those three years, having truly lost control of my book buying, sometimes purchasing three or four at a time.
So far this year, I am well below the half-way mark of $118. I have not subscribed to any new magazines, even letting quite a few lapse. I have only purchased a dozen or so books, and all for a buck or two each at library book sales.
This is a hard one for me to answer despite the low amount.
How much do you spend on reading?
Education
Here is where my family veers off of the average track.
The BLS data showed an average spending of $1,329.
Honestly, we spend more for that on our daughter's education, and she attends a public high school.
Also, depending on what you count as education, this number could be off. Do her weekly private music lessons count as education? They do in my book.
Anyway, we spend well over $25,000 on our son's private college tuition, room and board and all the little fees they dink you with. That number will go up by at least two grand next year, as he has made it into a college-sanctioned apartment building with two other guys. He also informed us that one of his ensembles may be traveling to Europe next year for a three thousand dollar tab.
Yes, I realize that many people pay and/or borrow their way through college, but one of the things that makes me who I am is that I have saved for and insist on paying my children's way through their undergraduate years.
I have saved over one hundred grand per kid for their college expenses, and we are nearly halfway through my son's undergrad days with nearly sixty grand left in that war chest.
Tobacco products and supplies
The BLS data showed a $337 average, which basically means that you either spend zero like my own household or three times or more that much for those who use tobacco products.
The last time that I smoked a cigarette was over a quarter century ago, and my wife never has.
Miscellaneous
I know that we blow that $959 out of the water.
I feel like my own family's miscellaneous expenses are about five to ten times that high.
Air fare to Florida or New Orleans or Arizona. A new flugelhorn for our son? Birthday gifts, wedding gifts, baby shower gifts, Christmas gifts, Chanukkah gifts and the like can add up to quite a bit more than this amount.
Cash contributions (charity, for example)
It makes me feel bad that we donate less than $2,081 despite making more than the average amount.
Last year, I made about a thousand bucks worth of donations; however, half of that was attributed to donating my old clunker Nissan to the American Cancer Society.
There are two charitable causes that I donate money to every year, and I think that this is a good year to step the amount up. One is Lurie Children's Hospital and the other is Ronald McDonald House.
I regularly hand out dollars to unfortunate folks begging in public, especially when with my children, so they can witness a charitable act and not grow up to be one of those folks who thinks of them as lazy and unwilling to work or pretends not to see them.
Personal insurance and pensions
I far exceed the $6,831 average on this one, but that is largely due to the fact that my salary is higher than the average of $75,000 and I contribute to a defined-benefit pension plan.
I looked up last year's numbers and found that I paid $6,553 in FICA and $4,756 to my pension plan.
If you add the payments to my and my wife's Roth IRA's, we would add about another ten grand to this.
I do not have a life insurance policy beyond the one that my job provides, but should.
Personal taxes
Again, if you add up my household's federal income tax bill as well as state taxes, we exceed the $10,489 average by about four thousand dollars.
Do You Dare to Compare?
If you know twenty households, all twenty will vary on their spending even if each of them live in the same neighborhood.
Most of the people in my own neighborhood do not pay for their kids to attend college, but most of them spend more than we do on alcohol.
Some people spend thousands of dollars on heroin or on illicit affairs. Some super frugal couples that I have read about on their blogs get by for less than two grand per month total.
Every family's spending is different. My own family knows people who blow ten grand or so three times per year on vacations and drive new cars but don't save a dime for their children's education. A financial advisor that I am friends with purchases gold coins with numismatic value every month, thus spending more than the price of one ounce of gold for every coin. We have friends who own second homes or multiple time-shares, most of whom regret buying them.
Whatever the case may be, every household is different and your income, spending and savings will deviated significantly from these averages. However, this can be used as a loose guide to identify areas where you may be spending too much.
Not being big on budgeting myself, it is just something that I find kind of interesting and as a guy who doubles the average amount of American spending on education per year, every month, it helps me realize where my priorities lie.
How do you compare? Do you dare?
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