What Do Americans Spend the Most On?

We recommend products based on unbiased research from our editorial team. We may receive compensation if you click on a link. Read More.

The cost of living in America is high and rising all the time. According to Value Penguin, the average American home will spend more than $5000 a month on both discretionary and non-discretionary items. This amounts to an average of more than $60,000 per year in spending per household, which adds up to roughly 82% of our after-tax income.

And with a national mean wage of $61,900 in 2022, according to the Bureau of Labor Statistics (BLS), far too many Americans are spending beyond their means just to survive. Broader economic factors are only magnifying this challenge. With the precipitous rise in housing, vehicles, and fuel, alongside our recent inflationary trends, many middle-class Americans are grappling to make ends meet.

In other words, life in America is not only expensive, but for many middle class working Americans, even just the basic cost of living is getting harder to attain. This is especially true for younger entrants into the labor market like recent college graduates.

But what exactly is it that’s costing us so much?

Obviously, if you’re writing your rent check or paying your mortgage as you read this article, some of the answers may be pretty self apparent.

But what are the most expensive things that we spend on as a country? While you may not be inclined to buy a big expensive car or bid on an expensive painting at an auction house, there are still plenty of fairly hefty everyday expenses that Americans are shelling out a fortune to afford.

As Bankrate notes, “Prices of goods and services are currently at a 40-year high, leaving consumers with less money in their budgets for things like savings and debt repayment. Americans devoted 9.1 percent more of their incomes to expenditures in 2021 than in 2020, according to the most recent Consumer Expenditure Survey. The report, published by the U.S. Bureau of Labor Statistics (BLS), lists the average amount spent in various categories.”

Before you can find ways to save money or live on a budget, you need to get a better sense of where your money is actually going every month. With that in mind, we’re taking a look at the most expensive things that Americans pay for over the course of a year. 

But don’t get the wrong idea here. This isn’t about yachts, sports cars, or lavish vacations. You don’t need to be Bill Gates or some anonymous hedge fund manager with a downtown Manhattan penthouse to spend a fortune on living expenses. These are the costs that ordinary middle class Americans are struggling to manage every day. 

As Americans, we pay many of these hefty expenses without giving it much thought. Indeed, while some costs like your house and car may be obvious, there are other costly expenses that simply add up over time. You may not realize how much you’re spending on these items until you really take a closer look.

And that’s exactly what we’re here for. So with that in mind, let’s take a closer look. What are the most expensive things in your life and how much of your monthly income goes into these priorities? Take a look at our list and see if some of these expenses sound familiar

The Most Expensive Things That Americans Pay For

The figures below are based on findings reported by Value Penguin which sources its data from Lending Tree. These figures break out the monthly expenses of the average American household. As Value Penguin notes from the outset, most households will pay for a similar combination of expenses. These are generally constituted of the same basic living requirements (i.e. housing, transportation, utilities) and civic commitments (taxes, social security). But how exactly do these costs stack up against one another, and where is most of our money going each month?

1. Housing

It will come as no surprise to most that housing is the most expensive cost for nearly all Americans. According to Value Penguin, the average household spends roughly $1100 a month on either rent or mortgage (though of course, that number is significantly higher for a great many Americans). Obviously, housing costs vary widely based on a combination of factors like  wealth, income, and geography. But as Value Penguin reports, most Americans will spend roughly 15% of their monthly income, or 21% of their spending budget, on housing alone.

Business Insider also points out that, in addition to constituting the largest monthly budget item for most Americans, buying a home will typically be the most expensive purchase most Americans will make during the course of their lifetime. And of course, many Americans go through this process several times over the course of their life. 

Each time, the down payment alone will come at a large cost. According to Business Insider, “The common 20% down payment on a house can be a huge number, but it’s something that many homebuyers are prepared for.”

It’s also quite costly, notes Business Insider, to sell a house. In this case, prepare to furnish your selling agent with a full 6% of what you receive for the sale. All of this is to suggest that the entire process of home ownership from purchase, to monthly mortgage payment, to final sale will usually be the most expensive item on your budget.

2. Transportation

Value Penguin places transportation next, noting that the combined costs of leasing or purchasing a car along with peripheral expenses like repairs, gas, and parking space, will typically cost Americans more than $800 per month. This figure also factors in those who rely on public transportation, taxis and Uber or Lyft services.

That said, for most Americans, the biggest cost of transportation comes from car ownership. And owning a car is more expensive today than ever before. From the rapidly rising cost just to drive a car off the sales lot to the growing cost of insurance, maintenance, gas and a parking space in a desired location, the cost of a car can form a substantial part of the family budget. 

According to Business Insider, “With longer financing terms and higher costs of borrowing, cars are quickly becoming larger expenses. And with a record high of 7 million Americans behind on their auto payments in 2018, financing cars is becoming increasingly burdensome.”

And in the aftermath of the COVID-19 crisis, the cost to both lease and finance a car spiked considerably. This is having the effect of driving up costs in other parts of the transportation sector with Uber and taxi riders paying more, train commuters footing heavier fares, and fossil fuel costs driving up expenses across the transportation landscape. This explains why Americans are putting roughly 12% of their monthly income toward transportation.

3. Taxes

Try not to get too angry over this next part. After your house and your car, the next most expensive thing in your life is probably Uncle Sam. According to Value Penguin, taxes amounted to the third highest budget line item for most American households.

Based on Lending Tree’s data, Value Penguin reports that “The typical household pays $9,402 per year in personal taxes — 11% of our total income. This doesn’t include property taxes, sales taxes, Social Security or Medicare payments. In 2020, we paid less in federal taxes than normal because of the stimulus checks many Americans received during the COVID-19 pandemic. The average household received $1,911 in stimulus payments from the government.”

Still, when push comes to shove, the combination of the withholding from your paycheck and what you might be required to pay when you file your taxes annually, is your third biggest expense. While a savvy accountant might be able to save you a buck or two on federal, state and local tax filings, the reality is that this is just the cost of living in the U.S. You may not be able to change that, but it does give you the right to complain if you don’t feel you’re getting your money’s worth!

4. Utilities

Speaking of getting your money’s worth, I think we can all agree that it’s worth the cost to keep the lights on and the water running. But it’s also true that rising fuel prices can lead to spikes in what we pay for utilities. And these days, that cost is pretty high.

According to Bankrate, “On average, people spend around $315 a month on electricity, natural gas, water, trash and sewer services. This comes out to $3,780 in a year.”

But these costs can fluctuate considerably over the course of a year, and depending on your geographic location. For instance, you’ll spend a great deal more on heating if you live in Minnesota, as opposed to, say, San Diego.

Either way, Value Penguin notes that these costs, when grouped together with other basic household maintenance costs (excluding rent or mortgage payments), will amount to roughly 10% of the average household’s monthly income.

5. Food

Food is a major expense in the U.S., amounting to an average of $610 per month per household. This breaks out to roughly 9% of the average household monthly income for Americans. But the actual amount that each household spends on food is highly variable based on household income.

According to Value Penguin, “While food is a necessity, the amount spent on food varies based on household income. People earning less than $15,000 per year spend $352 per month on food — $272 of which goes toward groceries.”

And in the face of inflation, grocery shoppers (i.e. everybody) have taken a major hit. In the aftermath of the COVID-19 crisis, prices for basic household necessities like milk, eggs, and coffee have skyrocketed. Even as inflation cools, many of these prices remain stubbornly high, suggesting that Americans will continue to lay down a significant chunk of their monthly budget at the supermarket into the foreseeable future.

6. Social Security Contributions

Coming in at 6th place in our ranking is the amount that most Americans pay out of their earnings toward Social Security and other retirement funds and plans. Value Penguin places that expense at roughly $7,246 per household, per year. That figure includes payments into Social Security as well as pension contributions and personal insurance contributions.

This amounts to roughly 9% of your personal income. And just as many other spending items have risen in recent years, there is evidence that Americans are also saving more for retirement. Obviously, relative to the rising expenses for housing, cars, and groceries, this is actually a positive economic indicator.

According to Bankrate, “The average amount people had saved for retirement in 2021 was $98,800, which was up from $87,500 the previous year, according to Northwestern Mutual’s Planning & Progress Study. Based on this, Americans saved $11,300 on average for retirement from 2020 to 2021.”

7. Healthcare

Healthcare expenses are uniquely high for Americans, relatively to other countries in the developed sphere. According to Value Penguin, the Affordable Care Act defines a reasonable cost for health insurance as making up less than 8.5% of a household’s monthly income after taxes.

 “Above that level,” says Value Penguin, “people become eligible for subsidies if they purchase insurance on the federal or a state health insurance exchange. You are also eligible if your household income is between 100% and 400% of the federal poverty level.”

At present, the average American household spends just over $5000 per year on healthcare, or roughly 6% of total annual household income. By Affordable Care Act standards, this makes it a “reasonable cost” but we doubt most Americans would consider it cheap. At that rate, the average home is shelling out more than $400 a month just for access to medical care.

8. Entertainment

While we may not be able to live like the British Royal Family, we can pay for the cable, streaming services and tabloids that bring their opulence and exploits into our homes. Of course, if following the Royals is not your cup of tea, there are countless other ways that we get our kicks as Americans from sporting events and concert attendance to outdoor recreation and video games.

And we’re more than willing to spend for our fun. According to Value Penguin, the average American household will spend 3% of our total monthly income-or just under $3000 a year–for entertainment.

If this number actually sounds a bit low, bear in mind that the figures sourced here were calculated in the shadow of the pandemic. Based on historical trends, it seems likely that continued economic recovery will bring greater spending in the entertainment sector. In the meantime, be aware that your fun and hobbies generally make up 3% of what you spend each month.

9. Clothing, Services, Etc.

Falling somewhere between fun and necessity is your wardrobe. While this final item on our list is sort of a catch-all for miscellaneous expenses, what you wear will generally occupy the biggest portion of this category.

Interestingly, the “etc” part of this category includes such varied items as education, tobacco and alcohol, and personal care, which for some reason all seem closely correlated. However, your personal household spending breaks down, Investopedia estimates that we spend roughly $1,866 per year on apparel and services.


Of course, these regular expenses don’t account for your occasional splurges, the special gifts you buy for loved ones, your winter holiday shopping spree and the countless other variables that impact your budget over the course of a year. 

As Investopedia notes, “Consumer expenditures for items such as jewelry, electronics, and automobiles are typically subject to the greatest fluctuations. These are areas where consumers tend to cut back their expenses substantially during difficult economic times when they have less disposable income remaining after paying for basic expenses such as food, housing, and utilities. Major appliance purchases also tend to be significantly affected by economic downturns when consumers attempt to minimize their expenditures.”

This suggests that you don’t have to spend to the point of living paycheck to paycheck if you know how to budget effectively. Need a little help getting started? Check out these awesome budgeting and spending apps for your smartphone or mobile device.