6 Warning Signs You’re Spending More Than the Average American

It seems harder than ever to save more than you spend. But keeping your spending in check now is crucial if you want to retire comfortably or even earlier.

But besides budgeting and checking your bank account, how can you tell if you’re spending too much and saving too little?

Compare yourself to how much the average American spends in the following six categories. You may find it’s best to cut back and start boosting your bank account.

Whether they rent or own, Americans dedicate a huge chunk of their monthly budget to pay for housing.

According to other United States census Bureau, 49.7% of the 42.5 million renter households in the United States spent more than 30% of their income on housing costs in 2023

While common financial wisdom holds that you should spend no more than 30% of your monthly paycheck on your house, housing prices, coupled with inflation, has put that goal out of reach for a lot of Americans.

And if you rent or own in an expensive area, you’re almost guaranteed to spend more than 30% on housing.

In 2023, the average monthly car payment for a new vehicle was $734. For a used vehicle, it was closer to $533.

If you’re paying more than that for a car you just bought, you’re spending more than most Americans. Though spending on cars in the U.S. is up all around thanks to inflation, there are still ways to cut car costs.

Most Americans don’t have enough money saved to retire comfortably, but the majority have at least a little something in the bank for when they leave the workforce.

In 2024, Northwestern Mutual reported that the average American has $88,400 saved for retirement. Of course, inflation has been so high that it’s doubtful most have been able to continue saving at a higher rate.

If you don’t have anything saved for retirement, you’re likely spending too much while saving too little. But thanks to compound interest, the sooner you start saving for retirement, the better.

If you haven’t signed up for your employer’s 401(k) contribution match, do it now. Most experts recommend saving 20% of your income. While you don’t have to start that high, you should be working towards that number now. Your future self will thank you.

TransUnion recently reported that the average American’s credit card debt hovers around $6,329. If you currently have at or near that amount on your card, you can count on it getting much higher over the next year.

Interest rates are still relatively high (more than 20%, according to CreditCards.com). And the longer you go without paying off your total balance, the more time interest has to accrue.

Credit card debt is costly, so if you can, consider measures like transferring your balance to a card with a lower interest rate.

You’ll also want to pay down your credit card debt before you retire and start living on a fixed income. If you’re near retirement age, prioritize paying off as much of that debt as possible.

The Bureau of Labor Statistics reported that the average American household spent just under $475 a month on groceries, and grocery prices seem to only keep growing.

To use that number (meaning there is some wiggle room here): If you consistently find yourself spending more than $119 a week on groceries, you might be able to cut back by planning meals before going to the store.

Luckily, there are ways to cut grocery costs. List each ingredient, then stick to your list once you’re at the store. Resist making any impulse purchases or buying more than you can eat to avoid wasting food.

You might also consider shopping around to ensure you're getting the best deals. You might be able to save money by buying in bulk at Costco or Sam’s Club.

Energy costs can be hard to budget for since fluctuations in gas prices and sudden weather changes are out of consumers’ control. Gas and electricity are also just more expensive in some areas of the country than in others.

But on average, Americans spend about $429 a month on all utilities (including gas, electricity, trash, sewage, and water), according to Forbes.

While you can’t do much about natural gas prices in your area, you can take a few steps to reduce your energy spending.

Turn off any lights whenever you leave a room, set your air conditioner a few degrees higher in the summer, and keep your heat a few degrees cooler than usual in the winter.

You can also consider investing in energy-saving appliances like low-flow toilets and energy-efficient dryers to take the edge off your utility bill.

If you’re spending more than the average American, you don’t need to panic — at least not yet.

Extenuating circumstances like a medical emergency or above-average grocery and gas costs might cause your spending to spike for a few months before returning to normal.

On the other hand, if you consistently spend more than the average in any of the categories we listed, it’s probably time to sit down with your budget and hammer out some details.

Finding costs to cut back on will help you grow your savings and give your budget room to breathe at the start of the new year.