All you Need to Know About Limiting your Expenses
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:
- Food: $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.
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.