Do you know where your money goes? Where do you spend that hard-earned income in a day, a month, even in a year? A recent credit card statement showed me a pie chart of how I was spending my money. It was broken down into five categories: services, gasoline, automotive, travel and entertainment, and merchandise. It was eye-opening to see exactly where my money was going every month!
If you find yourself short of money at the end of the month, it may be because you don’t even realize where your money is going, or in what areas you could be saving money. Over the next two posts, I’m going to use the five categories that were used in my credit card statement, and break down the average household’s expenses. You may be surprised at what we find.
So how is the typical household’s income spent? The average household income is about $46,000 per year… divide that by 3.14 (the average family size), divide that by 365 days in a year, and the average spending per day would be about $40 per day, per person.
So where does that $40 a day go? I read an article that stated that in a year we spend about $6,300 dollars on food. It also said that we spend about $16,000 on housing expenses which includes mortgage or rent payments and utilities. Those things – food and housing expenses – fall under the services category.
Much of our money goes toward expenses in the automotive category, including gasoline. If we estimate that our vehicles get anywhere from 18 mpg to 23 mpg, and we are driving, on average, about 12,000 miles a year, then we are using anywhere from 533 to 631 gallons of gas a year. It’s no secret that gas prices are on the rise, and right now the average gallon of gas in New Mexico is up to $3.729 per gallon. If we multiply that by the amount of gallons we are using in a year, we are spending (on average) $1,988.00 to $2,353.00 a year on gasoline.
The automotive category also includes car payments, routine maintenance, and insurance. Every vehicle needs routine maintenance including but not limited to brakes, oil changes, tune-ups, replacement of filters and fluids, and even car washes. For a $20,000 car the payment would be about $380.00 a month. Insurance depends on the person and the discounts they may qualify for, but it’s safe to say that the average cost per month is about $80.00. So add all that up and we are at about $6,000 per year for the automotive category.
In our next post we’ll talk about travel, entertainment and merchandise … to be continued!