Are you spending too much on "normal" expenses?

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Cautious Spending Is the New Normal



When I look at my expenses, I am shocked at how much I spend to make it through a month. I often ask myself, "Is this much spending normal? Do other people spend this much on expenses such as food, housing, clothes, and cellphones?" I decided to find out.

The Bureau of Labor and Statistics (BLS), part of the U. S. Department of Labor, surveys the population to collect detailed data on how much people spend on consumer expenses. They do this by collecting about 7,000 consumer spending surveys per month and by gathering 14,000 detailed spending diaries per year. This is exactly the kind of data I need to figure out whether my expenses are normal or not.

Of course, "normal" expenses vary a lot based on your income level and the size of your household. The Consumer Expenditure Survey from BLS provides data for 10 different income bands called "deciles." It is interesting to look at this data to see how households with really high income spend their money as well.

I sorted through this data to find some of the most relevant expenses so you can compare your spending with others at a similar household income level. The income levels presented in the tables are from the 2nd, 4th, 6th, 8th, and 9th deciles to provide a range of income levels before taxes.

Comparing your spending to "normal" levels for households of similar income and family size can be a great way to spot areas for improvement in your budget. If I found out that I was spending twice as much as normal on food, cutting back on food expenses would likely be an easy way to bring my spending down. If the average household can find ways to spend less on food, than I should be able to as well! (See also: 11 Budgeting Skills Everyone Should Master)

House Payment: $623 Per Month

The average housing payment is $623 per month for households that own a home considering households of all income levels and family sizes. I combined data from a few categories to calculate the bill for principal, interest, property tax, and home insurance that many of us are used to paying each month. There was no data available for home insurance expense, so I used a figure of 0.5% of the property value per year to calculate typical insurance cost.

Of course, housing costs are much more expensive in some locations than others.

How does your housing cost compare to "normal" based on your household income and your home's market value?

What to Do If Your Housing Expenses Are Not Normal

A drastic move to reduce housing costs would be to consider downsizing. If you are paying for more house than you need, you could move to a smaller house and save a significant amount of money. I once downsized to a house that cost half as much as my previous home and saved a ton of money. Another drastic solution is to move to a less expensive area. This would involve major lifestyle changes including finding a new job and placing kids in a different school.

Vehicle Purchase: $275 Per Month

There is a huge difference between making $800 per month payments on a new SUV, and owning an old car and having no car payment expenses at all. The average household spends $275 per month toward vehicle purchases, with households at higher income levels spending much more.

What to Do If Your Vehicle Expenses Are Not Normal

Consider trading in your expensive vehicle and getting a less expensive model. I did this and saved hundreds of dollars every month. A car that runs and is paid off beats a car that runs and is not paid off!

RELATED: 18 ways to save $100

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1. Keep the change

Retain the change from each of your transactions for an entire week and store it in a Mason jar, Ziploc bag or piggy bank. At the end of the week, count the coins to see how you did. Depending on how much you spend, you may reach your goal by following this one simple tactic.

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2. Reduce transportation costs

Download the GasBuddy or GasPriceWatch.com application onto your smartphone to locate the best deals in the local area on gasoline. You can also try carpooling with others from your job, or using public transportation for a week.

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3. Avoid restaurants, coffee shops for 1 week

Brew your own coffee to start the day and use the leftovers from the prior night’s meal for lunch. Also, decline invitations from colleagues to eat at restaurants at lunch this week. Pack your lunch instead, and invite them to join you in the park or plaza.

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4. Skip costly entertainment

Don’t plan on going to a play or the movies. An alternative is to find free entertainment at local community events. There’s also the library, which is jam-packed with books and DVDs that you can borrow for free.

Be sure to check out: “More Fun, Less Money: How to Save on Entertainment Costs.”

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5. Find free workouts

Try finding fitness programs on television or the internet, or at the library. I prefer SparkPeople because it’s a fitness hub with a variety of workout plans, many of which can be customized. It also offers meal plans for those looking to get fit.

Consider canceling your gym membership and instead embracing the great outdoors or group workouts. Check the local recreation or community center for free exercise classes.

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6. Carry cash only

Force yourself to save by setting a cash-only budget for the week. Take out a set amount of cash from the ATM at the beginning of the week — then leave debit and credit cards at home — and stretch your cash throughout the week. It will keep you focused on spending for essentials only.

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7. Sell some stuff

Head to a local consignment shop or a retailer, such as a Plato’s Closet, that will pay you on the spot for gently used goods. Can’t find one in your area? Try hosting a garage sale, or set up shop at the local flea market.

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8. Get to work

Pick up a temporary side gig to quickly accumulate funds. Or, let your creative juices flow and sell your products and services to others.

Check out “20 Odd Ways to Make Extra Money.”

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9. Clip coupons

No newspapers lying around? No problem. Head on over to a website like The Krazy Coupon Lady or Coupon Mom, where you will find printable coupons and corresponding instructions for putting the coupons to use. In some cases, a coupon can actually qualify you for cash back from the store.

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10. Call your car insurance company

Inquire about any discounts that may be available. Also, raising the deductibles on your auto and homeowners insurance will drop your premiums. Just be sure you have money in savings to cover your increased out-of-pocket expense in case you have to file a claim.

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11. Decrease your energy consumption

Reach out to your utility company to schedule a free energy audit of your home. Also, unplug any chargers or appliances that are not in use.

Set the thermostat a little higher to cut your air conditioning bill. Lower the temperature in winter and layer up on clothing. Also, consider hanging your clothes out on the clothesline to give the dryer a break.

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12. Don’t use your credit card

A high interest rate can greatly increase the cost of things you buy with your credit card if you don’t pay off the balance in full each month. Hide the magic plastic, and don’t increase the amount you owe on the card.

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13. Disconnect the cable

Freaked out by this suggestion? At least shave off the extras and try online television instead. Also, inquire about any discounts on bundles for which you may be eligible.

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14. Skip the spa

It’s always great to pamper yourself, but it can also add up quickly. My last spa visit, which consisted of a manicure, pedicure and massage, cost well over $100.

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15. Iron your own clothes

You can iron shirts and blouses, can’t you? No need to pay a professional unless an article of clothing truly requires professional handling by a dry cleaner.

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16. Call your cellphone provider

If the provider isn’t willing to reduce your monthly bill, switch providers or get a prepaid plan. Also, check out the free or steeply reduced price options. They do the job just as well as the big boys. I know from experience.

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17. Track your expenses

The simple act of paying attention to all of your daily expenses may be motivation enough to spend less. Join a free expense-tracking service like PowerWallet, then check in daily to see where your money’s going. PowerWallet will automatically send you money-saving coupons based on what you’re buying.
For some additional inspiration for getting expenses under control, check out: “How to Reach Your Goals Without Making a Budget.”

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18. Pick up some free cash

Does your employer match retirement contributions? Add another $100 to your 401(k) contribution and get a free $100 from the boss.

Here’s some guidance on how much you should put into your 401 (k) or other retirement plan for the maximum benefit.

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Food: $796 Per Month

With all of the great options for dining out and lots of high-end grocery products for sale at your local market, it is easy to spend too much on food. Do you spend more on restaurant meals than normal? Is your grocery bill higher than normal?

The survey data breaks food spending down into two categories: Food At Home (Groceries), and Food Away From Home. The average total food bill for groceries plus restaurant dining is $796 per month.

It was surprising to me that the average household spends more on food than on their house payment!

What to Do If Your Food Expenses Are Not Normal

The quickest way to cut your food bill is to reduce spending at restaurants and make meals at home instead. Admittedly this is more work, but the savings add up quickly. Next, cut back on expensive prepared foods purchased at the grocery store. Just because you buy it at a grocery store doesn't make it a good deal.

Cellphone Bill: $80 Per Month

Just today I heard a couple of friends comparing their cellphone bills, and both were lower than mine! Is your cellphone bill above average? After looking at the data, I have to admit that my cellphone bill is above average. My family has four smartphones, all with data plans.

What to Do If Your Cell Phone Bill Is Not Normal

You may be locked into a contract, but look for a better cellphone deal as soon as your contract is up. Depending on how much you rely on your cellphone, you may be able to find a discount carrier that meets your needs for about half the cost of a premium service.

Clothes: $149 Per Month

The clearance rack has been good to me — I just scored a $4 shirt that I can wear to work several times a month (or even more if my wife doesn't notice). Some of the clothes I wear are 20 years old. I feel like my spending on clothes is exemplary, but is it?

What to Do If Your Spending on Clothes Is Not Normal

This spending problem is pretty easy to fix — stop buying clothes! Recycle clothing catalogs without opening them and stay out of clothing stores. Set a date a few months or even further in the future as the next time you will consider buying clothes if you think you need something.

Entertainment: $227 Per Month

Some people spend a lot of money going to movies, sporting events, and concerts. Is your entertainment spending out of control?

What to Do If Your Entertainment Spending Is Not Normal

Start by setting a "normal" entertainment budget. Decide on a reasonable, limited amount that you want to spend on entertainment. You will still be able to buy tickets and go to some events, at least until your budget has been spent. Try to limit the really expensive events to only a few per year. You can also save money by skipping the food and souvenirs and just focusing on the event itself.

Alcohol: $39 Per Month

Spending on alcohol varies a lot from one household to the next. Some households are teetotalers that don't drink at all, while other households may spend $100 on booze during one weekend of going out. Is your spending on alcohol normal

What to Do If Your Spending on Alcohol Is Not Normal

This is another spending problem that is easy to fix — drink less! Set a reasonable budget for alcohol, perhaps the average consumer spending amount, and stick to it. Put this much money in an envelope to buy alcohol for the month and stop drinking when the booze money is gone.

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