Family of 5 Expenses vs Average Household Expenses

Understanding your household expenses is a key component of budgeting and financial planning. When we understand our cost of living, we can make more informed decisions with our money and benchmark ourselves against the average household in America. So, what are the average household expenses in America?

The average household in America has about $5,300 in monthly expenses (Source: Value Penguin). You can see in the image below, that I was able to narrow down average expenses for the county that I live in. You can run the numbers for your county and see how you’re doing when it comes to spending.

Continue reading to learn more about the average household expenses and how you can save more money.

Source: Economic Policy Institute, March 2018. Budgets are in 2017 dollars. Access the budget calculator.

Source: Economic Policy Institute, March 2018. Budgets are in 2017 dollars. Access the budget calculator.

Most common household expenses

Household expenses can be categorized as wants and needs. It’s important to understand your mandatory household expenses (needs) as well as your optional household expenses (wants). Remember, nobody made you sign up for that auto loan. What are the most common household expenses?

Here are 13 common mandatory household expenses:

  1. Mortgage/rent

  2. Insurance (auto, health, life, homeowners)

  3. Electricity and natural gas

  4. Water

  5. Garbage/waste disposal

  6. Household staples (toilet paper, toothpaste, etc.)

  7. Gasoline

  8. Internet

  9. Cell phone

  10. Child care

  11. Student Loan

  12. Credit card payments

  13. Auto loan

The above list does not include any of our optional expenses (wants). Optional is the best word to describe the type of expenses listed below. Because they are… Optional.

Here are 10 common optional household expenses:

  1. Eating out

  2. Clothing

  3. Alcohol

  4. Movies and entertainment

  5. Video games

  6. Fitness memberships

  7. Travel

  8. Weekend fun

  9. Household projects

  10. Monthly subscription boxes

Why it’s important to understand your household expenses

When you understand your minimum expenses in order to keep the house, the lights on, and food in your stomach, you can use that to make intelligent financial decisions. So, why is it important to understand your household expenses?

Understanding our household expenses allows us to make data-driven financial decisions rather than impulsive or emotional financial decisions. When we understand our household financial numbers, we can use that information as a tool to help us make important financial decisions like, “how much house can I afford.”

Our Household Expenses for Family of 5

My wife and I are raising 3 boys in Texas. Needless to say, they’re expensive. We currently spend about $7,300 per month according to our budget app. This includes daycare ($1,300/mo) which will reduce next year and disappear altogether in 2022. Without daycare, our total expenses are about $6,000 per month.

Your household cash flow is king

Our average monthly expenses for our family of 5 is $7,300 and we earn (after taxes, medical, and investments) about $10,000 per month. This means our monthly cash flow is about $2,700 per month. Why is cash flow important?

The difference between your expenses and your income is what you have available to save or spend each month. This is your cash flow.

4 choices we can make with our monthly cash flow:

  1. Invest it

  2. Save it

  3. Give it

  4. Spend it

Why compare your household expenses to the average?

If your monthly expenses vary greatly from the average, it may cause you to start asking yourself important questions. This is a good thing. We need to be honest with ourselves if we’re ever going to gain control over our financial future. Understanding your household expenses compared to the average household serves three purposes:

  1. Motivation to work harder towards your financial goals

  2. Affirmation that your household is on the right track

  3. Informs you if you’re being a little too frugal (is that possible?)

Be careful when increasing your household expenses

The decision to increase your household expenses may sound great at the moment but exercise caution when committing to a long-term expense like a car loan, mortgage, student loan, etc. Why should you care about increasing your household expenses?

When you increase your household expenses you increase the requirement to continue earning the level of income that can support the increase in expenses. If you don’t continue to earn the amount of money you’re earning today, that could be problematic for your finances. Committing to long-term expenses should be done with caution and foresight into your future financial situation.


Understanding your household expenses is simple. You simply need to identify what is a mandatory expense and what is an optional expense. Separate those two and take an honest look at your financial situation.

I like to compare our expenses and budget against the average household because it gives me a benchmark to see if I’m on the right track. If something is way off, it causes me to ask important questions about our finances.

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