Typical budget for an American family making $100k per year

Here's what a middle-class American family spends per year on housing, transportation, clothing and more

Today's expression: All in
Explore more: Lesson #693
July 18, 2024:

Have you ever wondered what a typical American family budget is like? Today, you'll learn about the spending habits of the average household. You'll learn how much typical American families spend on housing, transportation, health care, entertainment, and more.

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Let’s take a look inside the typical American household budget

Lesson summary

Hi there everyone, it’s Jeff and this is Plain English, where you get to upgrade your English by listening to stories about the world. And today’s lesson is all about the typical family budget in the United States.

On Monday, we talked about the salaries of different professions. And you learned that the median household income is about $75,000 per year. And a good, not luxurious , but a good middle class income would be $100,000 per year in most places. So today, we’ll talk about how, exactly, a typical family would spend that $100,000 income.

The expression we’ll talk about today is “all in.” This is a good one, speaking of budgets. All in. Today’s lesson number is 693. So that means JR has uploaded the full lesson to PlainEnglish.com/693.

A typical American household budget

So we’re going to talk about budgets today, and before we start, I need to emphasize this is an broad average budget for a household with a $100,000 per year income. A lot of families make more; a lot of families make less. But if you want to know about the typical American experience, this is it.

And if you’re used to seeing people spend like crazy in the movies, if you’re used to seeing how people behave in New York, Washington, the places you go on vacation , well you might be surprised by the numbers you hear today.

Now before we start, a household that makes $100,000 per year will pay about $18,000 in taxes, all in . So a typical household that makes $100,000 per year in salary income will have only about $82,000 per year, or a little under $7,000 per month, to spend on everything else.

So let’s start with the number-one expense : housing . Americans spend about 20 to 30 percent of their incomes on housing. So for a $100,000-a-year household, they would spend about $2,000 per month.

That budget includes a lot more than just mortgage interest or rent . Utilities are things like electricity , natural gas , water, sewer , trash service , things like that. Utilities make up about $300 of that monthly budget . Insurance , maintenance , and repairs are all included in that $2,000 per month, too.

The number-two expense probably won’t surprise you either: transportation . Americans have about two vehicles per household. And the typical household spends between $800 and $1,000 per month on transportation.

For most families, that means car loans on one or two cars, plus insurance , gas, repairs , tolls , oil changes , inspection fees , and parking . Some people need to pay to park at work, that’s a monthly bill . Some bridges and highways have tolls—again, that has to be factored in . And this category would also include plane tickets for vacations, too—any type of transportation, all year long is in this average . So transportation, all-in , $800 to $1,000 a month.

Next up, food. The average household spends about $800 per month on food. That works out to a little less than $200 per week. This includes food at home and food away from home, restaurants and take-out. This one surprises me. Even in lower-cost areas , you have to work hard to keep a family’s grocery bill under $200 per week.

The average American household pays out of pocket for health care and health insurance . Typically—and this is not true for everyone—but typically , families get health insurance through one person’s job. But they still have to pay some of the insurance premiums themselves. And the full cost of doctor’s visits and prescriptions isn’t always covered. So the average household pays about $400 to $500 per month out of pocket on health care, including insurance.

Life insurance , pensions , retirement savings , and other savings is another big expense . That, on average, is about $1,500 per month. So, this would be for things like insurance and savings: savings for retirement ; savings for emergencies ; savings for vacations, weddings , college for the kids, things like that. About $1,500 per month.

Miscellaneous : that’s furniture , cleaning supplies , alcoholic beverages , books, all the little stuff that doesn’t fall into one of the big categories. That adds up to about $200 per month.

Now, so far none of this has been fun. I mean, what about tickets to Broadway shows? How about vacations? Trips to the Italian riviera? Designer clothes , jewelry , handbags , spa days, tickets to NBA games, bling —all that stuff you see in the movies?

The average entertainment expense per month, for a household, is $250 to $300. Per month. So when you come to the U.S. and you visit New York, and you pay $30 to get into a museum, $200 for a ticket to a Broadway show, another $75 for a nice dinner, multiplied by four members of your family—I know it’s expensive for you as a visitor . But listen, that’s really expensive for the average American household too.

$200 to $300 per month, for a family, is a couple of streaming services , maybe a trip to the zoo or the movies, a little money for a hobby , swimming lessons for the kids. That’s pretty modest . So when you see a lot of spending on TV, just know that’s not the average experience.

If you have kids, you know: they need clothes. And they need clothes at pretty regular intervals too. Kids grow. They get clothes dirty. So the average household spends about $150 per month on clothing and apparel —that includes shoes. Again, not very much. If you have three or four people in your household, you have to work to keep it under $150 per month.

What about vacation? A trip to Disney World for a family of four is easily a $3,000 expense or more. Vacation is included in the numbers we already talked about, the transportation category or the savings category.

The average American household would do a couple of trips in the car, maybe around holidays. The average family would take one or two airplane trips a year. But there’s not a whole lot of room in a $100,000-a-year budget for a lot of big vacations.

Jeff’s take

Now, I do want to mention that the life I just described: this is a very good life. Two cars, a house with a yard , individual bedrooms for the kids, new shoes now and then, doctor visits when you need them: this is a good, good life. And compared to the lifestyle many— realistically , most—people in the world live, this is an absolute dream .

Anyone who has had a life like that, myself included, is very, very fortunate . But it does require budgeting , it does require tradeoffs , it does require hard choices sometimes. So hopefully, this was a good look behind the curtain at the average family’s budget.

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Expression: All in