$164.55.
That’s how much the average American spends each day when you factor in prorated costs such as housing, groceries, cell phone usage, gas, car payments, utilities, entertainment, insurance and various other expenses, according to a recent study conducted by GoBankingRates. For some, this is nothing more than chump change. For others, however, it can add up significantly over the course of a month, quarter and year — and possibly even affect credit scores and other accounts.
Think of it this way. If you’re an average American, that means you’re spending $1,151.85 per week, $4,607.40 per month and nearly $60,000 per year. Like we said, $164.55 per day is no big deal for many Americans, but for others it’s an amount where the expenditures may not match the income that they’re bringing in.
Average Daily Spending: A Breakdown
The smallest daily spenders, fittingly, are Americans under 25 years old, who spend — on average — less than $100 per day. The biggest average daily spenders is the Millennial generation, who spend in excess of $200 daily, mostly on housing costs, eating out and “other.” The 45-54 year-old demographic is the next biggest spending group, coming in at around $200 per day, with much of the spending being on housing, health insurance, utilities, education and eating out.
The spending is rounded out by the 35-44-year-old age group, which spends less than $200 per day and the senior citizen demographic, which spends less than $150 per day. In the grand scheme of things, the average amounts to the aforementioned $164.55 number.
According to data from The Pew Charitable Trusts, average household spending has increased by more than 25 percent over the past 20 years, however incomes have not kept pace. Evidence of this is the fact that it’s estimated about one of every three American families doesn’t have any type of savings account, which is a big problem.
Reeling in Spending
The study that we mentioned above from GoBankingRates is a good reminder on why it’s a good idea to regularly asses your budget. Obviously, you want to be bringing in more money than what you’re spending, but this shouldn’t be a break even. In a perfect world, about 20 percent of any family’s income should go toward a savings account. However, this isn’t the case for many American families.
So, if your income breaks even with your expenditures (or worse yet, doesn’t), how can you reign in spending to give you more breathing room? Here’s a look at some tips:
- Only use one credit card: One of the reasons why people tend to spend liberally is the fact that they can charge purchases and figure out how to pay them off later. Ideally, you only want to be charging what you know you can pay back, for the sake of both your credit score and your budget. You should also try to eliminate any seldom-used credit cards from your wallet to make any charges easier to keep track of and pay back.
- Set up an automatic transfers: If you want to have a savings account, you have to commit to it. Many Americans don’t commit to it, therefore any excess income gets spent on other things. One way to commit to a savings account is arranging a portion of your paycheck be automatically distributed into one. It’ll help keep those funds off limits from any frivolous purchases.
- Cut out the fat: Assess your monthly spending and see where you can trim any fat. Even if you’re living — and saving — comfortably, making this at least an annual exercise can just help you save more. Can you change insurance carriers to get a better rate? Can you cut the cable cord to save on that bill? Can you live without eating out as much? Can you make efforts to conserve more household energy? Can you downgrade to a less expensive vehicle when your lease is up? Even the seemingly smallest of things can all add up over the course of a week, month, quarter and year.
Regards,
Ethan Warrick
Editor
Wealth Authority
