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Home » Budgeting, Debt Management

All you Need to Know About Limiting your Expenses

Last updated by on 11 Comments

Visualeconomics.com recently posted a visual display of the U.S. Bureau of Labor Statistics report that shows where each U.S. household spends their money. Sadly, but not surprisingly, an amazing 51.7% of $49,638 in annual expenses came from two areas:

  • Housing: $16,920 (34.1%)
  • Transportation: $8,758 (17.6%)

Other expenses included:

  • cut expensesFood: $6,133 (12.4%)
  • Insurance/Pension/Social Security: $5,336 (10.8%)
  • Health Care: $2,853 (5.7%)
  • Entertainment: $2,698 (5.4%)
  • Apparel & Services: $1,881 (3.8%)
  • Cash Contributions: $1,821 (3.7%)
  • Education: $945 (1.9%)
  • Misc.: $808 (1.6%)
  • Personal Care: $588 (1.2%)
  • Alcohol: $457 (0.9%)
  • Reading: $118 (0.2%)

Prisoner to our Homes and Vehicles

This data really highlighted to me how much we spend on two things: our homes and our vehicles. Over 50%? When did our spending get this out of whack? It’s no wonder so many people struggle with debt. After paying for these two things, they have less than half of their money left for everything else.

The Silver Lining

There is a silver lining in this data. Forget micro-managing all of your expenses. If you can attack your housing and transportation expenses, then there is not too much need to nickel and dime everything else. In limiting these two expenses, you just may find the secret to personal finance success.

Take-Aways

If you take away anything from any personal finance blog you read – let it be this:

  • a. take public transportation, commute, or self-power commute every day.
  • b. pay for the bare minimum in living space that you need. If you are single or half of a couple, do you really need more than one bedroom of living space?

Keep it simple.

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11 Comments »
  • Melinda says:

    This is so fundamentally easy but true. There is so much noise out there about how to save a dollar here and there, but that stuff can drive you insane. Just focusing on the big boys can go a long ways to helping you achieve your goals.

  • Shaun says:

    So we spend as much on entertainment as much as we do on healthcare? Interesting. =)

  • Al says:

    Do people really need that BMW or fancy SUV? Do they really need that one bedroom top floor condo on the river? Stop purchasing stuff for the sole purpose of increasing your social status! You may look cool with your 64″ flat panel plasma TV, but if you’re eating raman noodles because of it, you’re the only idiot to blame.

  • Wayne says:

    Why are taxes never included in these types of studies? I bet that taxes are right behind housing as the second largest household expense.

  • Bradley Jones says:

    Unfortunately for those who don’t live in large cities it is hard to commute with public transportation. It is a great money-saving alternative for those to whom it is available, though.

  • kathy says:

    i would love to use public transportation- helps my $$ and the environment. Sadly, America is known for NOT having public transportation, really. Taking a bus from my apartment to work would take 1.5 hours (and I live in a relatively big city in California) + 20 min walk to bus stop. But by car it takes 5-10 mins.

  • Rachel says:

    I live just outside of Boston, with my boyfriend (in our one bedroom 1 office apt; the extra space does wonders on a relationship!) We both rely exclusively on public transportation and that’s the catch-22 of it: to use it most effectively, you need to be in a city and city living = much higher rent. I guess we technically COULD live further out thus reducing rent — but the local area of shops, small dining establishments and a community feel is more important than the potential couple hundred a month we’d save. To compensate, we plan our purchases based on NEEDS vs WANTS — and that has only enabled us to save up & spend on thing we need GUILT FREE!

  • Isaiah says:

    I’d eat Ramen in exchange for a top level condominium lol. After all, you make money to spend money, right?

  • Rob Brakensiek says:

    Good points, your housing and car is easily the big ticket items.

    Cars today should take you 150K miles easy. There is no reason to trade in early. People should really consider driving their cars longer.

    I don’t have as big a problem with houses, typically they are an appreciating asset.

    Thanks

  • Andy says:

    Yeah, the post is interesting, and true. Saving money with this two lions is a smart beginning. Of course it helps saving money anywhere, but house in specially transport must be cut first…Easy, it doesn’t mean to go living under the bridge, but be smart and plan before spending money with status stuff, as the guy said. And transport, of course, it seems to me, that a new transport education/mind could break this kind of costs, by using bicycle, for example, just think about how many things you could do near to your home without using you V8 vehicle, isn’t it?

    It’s just a matter of stop being lazy and to start! Try it!

  • Lynz says:

    I love this post. I am a homeowner and have been for over 3 years and Im not even 28 yet. By reducing my rent costs from living alone to spending a year with roomates i saved over $200 a month and then was able to buy a home. I also reduced my driving by always stoping for groceries on my way home instead of making a special trip to the store. Think about it, how many stores do you pass on your commute to work? you can get an errand done a day while your driving by instead of making special weekend trips running all over in 1 day.

SPEAK YOUR MIND

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