What Does The Average Person Spend Their Money On? (Plus Implications For A More Frugal Lifestyle)

When it comes to reducing your living expenses there’s a whole world of advice out there from how to re-purpose your household trash as craft materials to budget-friendly cleaning tips.

But for too long this form of frugality has worried me.

After all, how much do I really spend on cleaning equipment or lampshades? Answer: not a lot.

So my savings, from following this often well-meaning advice, will be minimal. That’s not to say that this type of advice doesn’t have a place. After all, these tips will save you money. And for many people they’re as much about reducing waste as they are saving money.

But if you want to significantly reduce your expenses to the point that you can rapidly pay off your debt, build up your savings and become more financially stable we need to look to the big expenses.

Because cutting 20% off our major monthly expenses will have a far greater impact than using a bottle of vinegar to clean your windows.

So, what are these major expenses? Where does the average person spend most of their money?

The Biggest Expenses

I went searching for some concrete statistics to tell us how the average person spends their money; I wanted to know what the biggest typical expenses are so that we can look at immediately tackling these and making a significant impact in our financial lives.

As it turns out there are all sorts of figures available on typical living expenses if you look hard enough.

So what do they tell us? Here’s a breakdown for the “typical” American and Brit…

• Brits spend 31% of their income on housing
• Brits spend 13% of their income on transport
• Brits spend 11% of their income on groceries

• Americans spend 34% of their income on housing
• Americans spend 15% of their income on transport
• Americans spend 13% of their income on groceries

While most of you visiting this blog are based in the States, as a Brit I also couldn’t help sneaking a look at how these figures compare to the UK.

As it turns out the figures are surprisingly similar.

On both sides of the pond our largest living expenses are housing, transportation and food. Lampshades are, not surprisingly, missing from the “big three”.

The Implications For A More Frugal Lifestyle

If you want to significantly cut your monthly expenses it makes sense to go after the “big wins” – namely housing, transport and groceries.

How To Reduce Your Housing Expenses

• Reduce your rent or mortgage payments
• Slash your water bill
• Save electricity and reduce your utility bills
• Use a price comparison site to find more competitive insurance and utility suppliers

How To Reduce Your Transportation Costs

• Move closer to where you work
• Walk, cycle or lift-share more
• Buy a smaller but more fuel-efficient car
• Be satisfied with an older but acceptable car

How To Reduce The Cost Of Food

• Eat out less
• Grow your own fruit and vegetables
• Buy less processed food
• Prepare brown bag lunches at home

Arguably, these 12 simple steps can do more to reduce your monthly expenses than anything else.

So focus on the big things right now to make an immediate and sizable impact on your living expenses.

Then after you’ve done this you can make as many lampshades as your heart desires.

What do you think: do these figures surprise you? How do they compare to your own spending habits? What tip has had the biggest impact on reducing your expenses?