How Americans spend their money

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Do you know where your money goes? [Insert your own joke here.] It is important to assess periodically how much you spend on different expenses throughout the year. You cannot control your expenses if you fail to plan for them and track them.

Expense tracking is a useful exercise at the national level as well, because it gives government agencies and policymakers insight on consumer spending and whether current programs or policies are having positive or negative effects. The Bureau of Economic Analysis (BEA) and the Bureau of Labor Statistics (BLS) serve this purpose for the Federal Government by issuing consumer-spending updates.

To get a broad scale picture of expenditures without seasonal factors or one-off annual expenses, it is best to compare annual consumer expenditures.

The recently released BLS Consumer Expenditures report for 2015 offers a mix of good news and points of concern. In general, Americans are spending more per "consumer unit", defined as a group with shared expenses — a family, singles living alone (or sharing but financially independent of each other), or two or more people in a household that share expenses.

The average spending by consumer units is up 4.6% from 2014 to reach $55,978. Average pre-tax income also increased to $69,629 per consumer unit, but the 4.1% increase did not quite keep up with the change in expenses.

Where do the expenses go? The majority of consumer expenses go toward housing (22.7% of aggregate expenses). Homeowners are gaining a bit of relief, as continuing low interest rates cut the share of mortgage interest and associated payments from 6% of expenses in 2013 to 5.1% of expenses in 2015. In contrast, renters are spending an average of around $500 more annually on rent, up to 6.8% of spending compared to 6.5% in 2013.

RELATED: 10 real estate accounts to follow

10 real estate accounts to follow
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10 real estate accounts to follow

Illustrated Properties
Based in Palm Beach Gardens, FL, this account exclusively features current listings (including prices) of mansions with pools. A fine display of true and massive Floridian architecture.

Photo credit: Instagram


Saunders & Associates
Because who wouldn't rather be at a beachfront estate in the ever-glamorous Hamptons?

Photo credit: Instagram

MSM Luxury Estates
Based in Beverley Hills, CA, celebrity homes are often featured, as are infographics including statistics on the current market. 

Photo credit: Instagram

Joyce Rey Real Estate
Featuring estates everywhere from California to Italy, prime luxury pads are accompanied by shots of pretty decor, quotes and personal moments from Joyce Rey's glamorous life. 

Photo credit: Instagram

Houlihan Lawrence
The real estate firm that specializes in Westchester County and the suburbs of northern NY posts listings in real time, as well as shots of hip and marketable hotspots in the towns where they sell.

Photo credit: Instagram

Chad Carroll
This "Million Dollar Listing: Miami" star posts pictures and listings showcasing all of Miami's architectural beauty, from rooftop views to sleek interiors.

Photo credit: Instagram

Douglas Elliman
As one of the most prestigious real estate companies in the world, it's no surprise that this account is full of all things luxurious, including cityscapes, events, and famous landmarks.

Photo credit: Instagram


Life insurance and pension expenses constituted 11.3% of expenses in 2015, growing 10.9% year-over-year, the largest increase for any major component of spending. Both payroll and non-payroll deductions increased, suggesting that Americans are focusing a bit more on retirement savings.

Education expenses showed the next highest increase, with a change of 6.4%. Education only constitutes 2.4% of overall spending, but its share is rising rapidly and gaining political scrutiny. Meanwhile, for all the negative publicity, the other politically hot topic of healthcare stayed relatively flat from 2014. Healthcare made up 7.8% of 2015 consumer expenditures.

Utility expenses stayed virtually unchanged, with the average family spending $3,885 annually (6.9% of collective 2015 expenses).

Low inflation has kept spending on groceries down relative to other expenses. Groceries made up 7.2% of 2015 spending to become the fourth-highest category of spending. The fifth and seventh-highest categories are related, with vehicle purchases at 7.1% of 2015 spending and transportation costs at 6.1%. The drop in gas expenses (a greater than 15% drop over 2014 expenses, constituting 3.7% of the 2015 spending total) may have been partially directed toward replacing older vehicles.

The windfall from lower gas prices may also have contributed to increases in dining out (5.4% of 2015 spending), entertainment (5.1%), and clothing, home furnishings, and charitable contributions and alimony (each at 3.3% of spending). Miscellaneous spending accounts for the remaining 4.5% of 2015 expenses.

Now that you have reviewed America's expenditures, why not take the time to review your own? It's a good habit to get into, not only to see how you stack up with the average American family but also to look for ways that you can spend less and save more.

If you cannot review your expenses because you do not record them or do not have a budget, start there and make a note to review your expenses monthly. You will probably be amazed at the results — whether you like them or not.

Let the free MoneyTips Retirement Planner help you calculate when you can retire without jeopardizing your lifestyle.

This article was provided by our partners at

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