Brian and I have never
kept a household budget, per se. We rigorously track all our household expenses, and each month I tally them up to figure out how much we've spent in different categories—house, food, car, and so on—but we've never set firm limits on how much we can spend in any given category. I just keep an eye on our spending, and if it looks like it's getting out of hand in any area, we look for ways to rein it in.
For the most part, I use these spending numbers only for internal comparisons: to compare what we've spent this month in a given category to what we spent last month, or last year. If it's lower, I pat myself on the back; if it's higher, I try to figure out why. But I seldom bother to compare what we spend with what other Americans spend.
Recently, though, an article on Money Talks News (MTN) called these numbers to my attention. Entitled "
11 Expenses to Cut Now If You Want to Retire Early," it outlined how much the average U.S. household spends in various categories—housing, car, groceries, etc.—and then talked about ways to cut each of these expenses so you can reach
financial independence more quickly. Since this is
a goal we're shooting for, I went through the article and found that in most cases—but not all—we're already spending well below the average in these categories. So I thought it might be interesting to show how our budget compares to the average and how we're managing to keep it lower (or, in the few cases where it's higher, what's keeping it high). Instead of a collection of general tips like the MTN article, it'll be an actual case history of what one family did and how it worked (or didn't).
1. Shelter
According to MTN, the average U.S. household spent $11,747 on "shelter" in 2018. Consulting the
Bureau of Labor Statistics (BLS) report from which they took the data, I found that "shelter" is defined to include rent, property taxes, mortgage payments, maintenance and repairs, and insurance. Since we don't pay rent and have already paid off our mortgage, I guessed that our housing expenses would be well below this average, but when I checked our actual expenses, I found they were a bit above it. Adding up our property tax, insurance, and "home maintenance/furnishing" expenses (averaged over the past three years), we spent more than $11,900.
So how did we manage to spend more than the average family while living in a relatively small, paid-off home? Well, a few different ways. First of all, we live in New Jersey, which holds the dubious honor of having the
highest property taxes in the country. And our particular area's tax rate is above average even for New Jersey, so we pay close to the median in tax each year even though the value of our home is significantly below the median. And on top of that, we've spent around $11,300 on "home maintenance/furnishing" in the past three years, for an average of around $3,780 per year (though that included some large one-time expenses in the past three years, such as a new roof and water heater).
So what are we doing wrong? Mostly, just living in New Jersey, which happens to be an expensive place to live. When you compare our average annual shelter costs with the average for the Northeast, which you can see in
this table from the BLS, we're well below the average. If the statistics were broken out to the state level, we'd probably be still further below the average for New Jersey.
Would any of MTN's tips on reducing housing costs help us? Well, maybe, but they're not really practical for us. Their first idea, "getting a roommate" (or in our case, a boarder) would require some retrofitting of the house, which would take a while to pay for itself, and it wouldn't be a very comfortable situation for us. "Downsizing" (which in our case would mean downgrading from a house to an apartment) and "moving in with relatives" are sacrifices we're definitely not prepared to make. And as for using our home to make money via Airbnb, when I searched listings for single-room rentals in our area, I found the going rate was around $30 per night. If we managed to rent out a room for one weekend a month—an optimistic assumption—we could only make around $720 per year, which wouldn't make much of a difference.
Fortunately, what we spend on housing by virtue of where we live, we make up for in other ways. Such as...
2. Groceries
The average U.S. household's spending on groceries was $4,646. Ours was about $2,600—less than 60 percent of the average. This is one area in which we're clearly doing well, but how come?
First of all, there are only two of us. The average number of people in a household (or "consumer unit"), according to the BLS, is two and a half, so you would expect our spending to be about 20 percent below average. But when you look at the average "married couple only" household (shown on
this table), the average spending for "food at home" doesn't drop; it jumps to $5,000 per year. So compared to other married-couple households, we're actually spending less than 55 percent of the average.
So it's not the size of our household that's making the difference. Instead, it's probably what we eat. As I discovered when we did the
Reverse SNAP Challenge five years ago, it's actually pretty easy to eat on a SNAP budget if you cook from scratch and eat very little meat. Other habits that proved very helpful were keeping a garden and doing our shopping at multiple stores, so we can get the best prices on all the different foods we buy. Of course, that only works if you happen to have multiple stores in your area, but even if you have only a couple, keeping a
price book so you know which items to buy at Aldi and which to buy at Walmart will help you use your dollars as wisely as possible. And it will probably help you more than MTN's grocery-saving tips, which include using coupons (a strategy that
usually doesn't save us much, though there are a few
notable exceptions), buying bread at grocery outlets (not as cheap as
baking your own), and storing your food so it won't spoil (a good idea, but don't most people do this already?).
3. Vehicle Purchases
In 2018, MTN says, the average household spent $3,975 on "vehicle purchases." That's not the total amount spent to
own a car, including gas, insurance, repairs, and so on; that's just the amount spent to
buy the car.
By contrast, our annual expense for auto purchases is...well, I can't say how much it is, because we've only bought one new car in the 15 years we've been married, and it's only 9 years old, so I can't say how many years we'll have it. But if you consider that our last car was over 15 years old when it finally bit the dust (and that it died an untimely death in a crash, rather than being put out to pasture in its old age), it's certainly reasonable to assume that the one we have now will last us at least 15 years. And since we paid around $16,000 for it (cash), that means our per-year expense for owning it works out to about $1,066. If the car lasts more than 15 years, it will be even lower than that.
In this particular case, MTN's advice for saving is exactly the same as ours: buy the best car for you, then make it last as long as possible. Their advice to "consider buying a late-model used car" is also sound, though that word "consider" is important; when we compared the cost per year for a late-model Honda Fit to the new one we actually bought, we found that it wasn't actually any cheaper, and it didn't have as many safety features as the new one. So do the math before you decide.
4. Eating Out
The average family's expenditure for dining out was $3,459 in 2018. (For married-couple households, once again, it was actually higher than this average, at $4,065. Maybe families with kids just don't have the time to dine out very often.) Our expense for dining out was a much lower $424 per year, and for a very obvious reason: We hardly ever do it. Brian is a good cook and enjoys it, so we only eat out when we have a particular reason: to celebrate a birthday or anniversary, to entertain guests, because we're going to be on the road or otherwise away from home at dinnertime, because we have a craving for a specific food we can't make at home (though the number of such foods has diminished), or, most rarely of all, because neither of us has the energy to cook. So most of our "dining out" expenses are actually for smaller treats, like pizza at a game party or coffee at Starbucks, rather than an entire meal.
I realize not every family is lucky enough to have a member who's good at cooking and enjoys doing it. However, I maintain that anybody
can cook, even if they don't love doing it, and can get better at it (and possibly enjoy it more) the more they practice. So here, again, my best advice for saving money on dining out coincides with MTN: do it less. And when you do eat out, make it count and go for something you couldn't make just as well at home.
5. Gas and Oil
That's for your car, not for your house. The average household, according to MTN, spent $2,109 on these in 2018, and the average married couple, according to the BLS, spent $2,236. I don't have a record of how much we spent on motor oil for our car, since our mechanic changes it for us and it's lumped in under "maintenance." However, I can say our expense for gasoline was $676, roughly one-third of the average.
Why so low? Two reasons: we only have one car between us, and we don't use it for everything. Brian rides his bike to work most of the time in the warm months, so the car sometimes sits unused for a week at a time. We still put a good number of miles on it — about 11,000 in the past year — what with our annual jaunt out to Indianapolis, shorter trips to visit friends in Virginia, and shorter trips around New Jersey for dance practice, concerts, errands, and such. But we prefer to walk or bike whenever we can.
One thing we don't do, though, is to use public transit instead as MTN suggests. In the first place, we don't really have any that could get us to all the places we need to go; our transit system here is mostly designed to funnel people into and out of New York and Philadelphia, not to get them from one place in New Jersey to another. And in the second place, a typical train trip generally costs quite a bit more than the gas required to drive it. If we could afford to give up a car entirely by using transit, that might be cheaper, but as we have a car, it's cheaper to use it than to take a bus or train even when one exists to take. (And sadly, according to
CityLab, the transit situation in most U.S. cities is just as bad, if not worse. So for most car owners, MTN's advice simply isn't practical.)
6. Clothing and Footwear
This is another area where we're way below average. The average household spent $1,866 on these in 2018; last year, we spent $421. And that was an above-average year for us, including two new pairs of shoes for me to replace ones that had worn out.
How do we keep this cost low? First of all, by disregarding fashion almost completely. As a general rule, we buy new clothes only to replace old clothes that have worn out or are about to wear out (and only after at least attempting to
repair them first). Pretty much everything we own was never particularly in fashion to begin with, so it doesn't matter if it falls out.
And second, we do much of our clothes shopping, maybe even most of it, at
thrift stores. Our local one isn't very big, but it's cheap, and by checking there frequently, I can manage to find a surprising number of items that fit and are useful. And we always make a point of hitting the Indy-area Goodwill stores when we're in Indiana over Christmas. We can't get everything secondhand; shoes and jeans for me, in particular, aren't commonly available in my size. But we're able to keep our wardrobe fully stocked mainly with used clothes, which also happens to be the main tip recommended by MTN.
7. Cell Phone Service
This is probably the one expense that makes us look more like we belong on an episode of Extreme Cheapskates than any other. The average US household spends $1,188 per year on cell phones; we spend roughly $161. Although I finally took the plunge and bought myself a smartphone after
my purse was stolen in 2018, I only use the most bare-bones plan for it that I could get from
Red Pocket: $10 a month (plus tax) for 500 minutes, 500 texts, and 500 MB of data, none of which I've ever come anywhere close to using up. And Brian still has our old feature phone with its $3-per-month (plus tax) prepaid plan from T-Mobile.
Admittedly, this may not be quite a fair comparison, since many families these days are using their cell phones as their primary phones, while we still pay $40 a month for a landline. But our combo of a landline plus minimal cell phone use is still significantly cheaper than the average cost for cell phones alone, and it has the added advantage of ensuring that we can't ever be those people who can't go five minutes without checking their phones.
8. Car Insurance
Not much savings here. The average household's annual expense for car insurance is $976, while ours is around $750. And that's for only a single car, with low-to-average mileage. We already follow MTN's advice for keeping the cost down by shopping around yearly; it's just that there's only so low you can go in New Jersey, even with one car that's nine years old and a clean driving record. Just as it's an expensive place to live, it's an expensive place to drive. Probably, in both cases, because there are so many other people doing the same.
9. Alcoholic Drinks
On our expense spreadsheet, alcoholic drinks get lumped in with groceries, so I can't tell at a glance just how much we spend on them each year. However, I can do a quick back-of-the-envelope calculation. We buy the cheap tawny port from Trader Joe's for six bucks a bottle whenever it's available, and it takes Brian about two weeks to go through a bottle, so that works out to around $156 a year. We can't always get the cheap stuff, so occasionally we fill in with a more expensive, though never
really expensive bottle — maybe fifteen to twenty bucks — and we occasionally pick up a bottle of bottom-shelf gin or rum, or a liqueur of some kind. (The cheap vodka we buy to
make vanilla extract doesn't really count, since it isn't a drink but a food ingredient.)
So, at a rough estimation, you might say we spend around $200 a year on alcohol — less than half the $583 spent by the average household. We've tried MTN's tip of shopping for alcohol at warehouse stores, but Costco doesn't seem to carry tawny port, and their other liquors, though undoubtedly a good value, are higher-quality than we actually need. So, Trader Joe's it is.
10. Medicines
This category, which includes "prescription drugs, over-the-counter drugs, and vitamins," costs the average household $483 a year. Presumably that's the amount they pay out of pocket, not counting any costs that are covered by insurance. I don't know exactly how much we pay for this category, since it's all lumped in under "health care" on my expense sheet, but at a guess, I'd say it's pretty close to this average. Brian only takes one medicine every day, but I require an assortment of meds and supplements to keep me in fighting trim, and while none of them costs all that much, it all adds up. MTN's advice to use a prescription discount card wouldn't really help us, since insurance already picks up most of the cost of our prescriptions, and comparing prices for OTC drugs (and buying generic when possible) is something we do already. Oh well.
11. Cleaning Supplies
OK, we're going out with a bang on this category. The average household apparently spends $184 per year on cleaning supplies, which includes laundry detergent. MTN tells readers "it’s relatively easy and inexpensive to make" your own detergent, but that's only true if by "relatively" they mean relative to making, say, your own clothes. Compared to buying detergent at the store, making your own is neither easy nor particularly inexpensive, as I
calculated back in 2013. It might not save you any money at all, and it's certainly a much bigger hassle to make and use.
We, on the other hand, have been using the same big bottle of
Kirkland Signature Ultra Clean detergent for over a year, and we still have maybe a quarter of it left. (In theory, the bottle is only good for 140 loads and should have been gone long ago, but we never use close to a full capful, and our clothes don't seem to be noticeably less clean as a result.) If we assume it will last us a total of 18 months, that works out to about $10 per year. The other commercial cleaning products we buy are:
- OxiClean Versatile Stain Remover, which we use for cleaning the toilet and occasionally for getting stains out of laundry. An $8 carton lasts us about 8 months, so that's $12 per year.
- Dish soap — usually the cheap stuff from Aldi, which costs $1.89 per bottle. A 24-ounce bottle lasts us maybe 3 months, so that's another $7.56 per year.
- Mrs. Meyer's Clean Day Multi-Surface Everyday Cleaner, which we bought on a whim at Target to see if it did a better job on our grease-spattered walls than ordinary vinegar and water. It did, but not that much, so we haven't used it often; this $4 bottle will probably last us a couple of years. So that's another $2 per year.
- For really, really tough stains on walls and appliances and such, HDX Easy Erasers — a Magic Eraser knock-off from Home Depot. We only bust one of these out a few times a year, so a $4 box of six erasers will probably last us two years, adding $2 per year to the list.
For everything else, we follow MTN's advice and use homemade cleaners — mostly vinegar and water. I don't keep track of how much vinegar we use specifically for cleaning purposes, but I know that a gallon of white vinegar costs us only $2 to $3 and lasts us for at least a year, so we can't possibly be spending more than $2 a year on that.
So, in total, we're probably spending around $36 a year in this category, less than 20 percent of the average. And it's as simple as (1) sticking to vinegar and water whenever we can, and (2) not using more of the commercial cleaners than we absolutely have to.
So there you have it: why we spend more than average in some categories, and how we spend less in others to make up for it. Of course, I realize that your situation may be completely different from ours, so maybe some of the things that work for us won't work for you. For instance, if you live way out in the boonies, and/or you have several kids, getting by with one car might not be practical for your family. But at least
some of the savings tricks that work for our family — like using homemade cleaners, rarely eating out, and buying new clothes only when old ones wear out — can almost certainly work for yours. And then, too, you may be able to save in ways that we can't right now, like living in a small apartment or using public transportation exclusively.
It all comes back to what I've always maintained: there's no right way or wrong way to be ecofrugal. It's all about finding what works for you. (Of course, if you know of any other great savings tips applicable to everyone that we're not currently using, I'm always eager to learn more!)
So I started browsing through their game collection and found that they had several jigsaw puzzles, which I recalled had been a nice diversion for us during a period of repeated power outages. However, that wasn't really something we needed right now, with the power and Internet still working, and it would be a bit hard to work on one now anyway, with our two cats sure to jump up on the table and "help" all the time. So instead, I chose a bird-themed puzzle that I thought my sister's family would enjoy and sent it to them as a gift. She sent me back an email yesterday saying, "This was such a fun idea! Thank you!" and including a picture of their first day's progress.
Then, on our way home, we passed by Ellin Kon, a small Greek grocery that's still open (as a food store, it's allowed to keep operating) but keeping limited, unpredictable hours. This reminded me that we actually needed some olives for the upcoming Seder, since we follow the modern custom of adding an olive to our Seder plate to represent the hope for peace in Israel. (I partly chose to adopt this custom because Brian likes olives and seldom gets to eat them, so it's a treat for him as well.) So I popped in and picked up a small jar of green olives stuffed with garlic, which (since garlic is reputed to be good for you) can also represent the hope for a quick end to the pandemic. The helpful salesclerk even sprayed my hands with sanitizer afterward.
