Some habits form so easily we aren't even aware of them, like the way we manage and spend our money. Poor spending habits can easily land us in trouble. One of the ways we get derailed from our budgeting is by trying to keep up with the Joneses. Which made us wonder, how does our spending compare to the average?

What Are the Spending Habits of the Average American?

It can be hard to figure out how much our neighbors make and spend because, well, it's an awkward thing to talk about. Sometimes we might exaggerate what we earn or downplay how bad we are at saving. To get a better understanding of where American's spend, we looked at four different studies.

Using the averages of these four studies we can see what percent of people's budgets go to common categories.

What Percent of Income do Experts Recommend You Budget?

When we make budgets, people usually start with their existing bills. Then, whatever they have left at the end can be for fun or for saving goals. This generally works, but you can run into the issue of not having anything at the end so you're constantly stuck in the rat race. Looking at recommended allocations can show you where you're going way off the mark. For example, how do you know what is considered overspending when it comes to transportation? Knowing where you stand can open your mind to potential cutbacks.

So, what percentage of your income do experts recommend you allocate to each budget category?

• Housing: Between 15% and 25% depending on your debt.
• Food: 11% (including in home and outside of home dining)
• Apparel and Services: 5%
• Transportation: 8% (This should include all car maintenance costs)
• Health: 5%
• Entertainment: 5%
• Personal Care: 1%
• Personal Insurance and Pensions: 10 to 15%

These are general recommendations made with no consideration of your income, situation, or saving goals. Consider them benchmarks to reveal how close you are to a balanced budget. If you're working off debt, you might want to find housing that was closer to 15% of your income, leaving you 10% to put towards your payments. Or, if you're saving for a house, you may want to find an apartment in walking distance to work. This can allow you to reallocate you transportation budget towards your down payment.

What Can You Do If You Are Overspending?

The Credit Examiner found that the average American is spending $1.33 for every dollar earned. Yea, let that sink in. If you're overspending, you're in "good" company. Here are some steps you can take to get your spending back in control.

1. Identify where you are currently spending: Don't think of this as a budget because it's more like an audit. You need to identify where your money is currently going so that you can evaluate if this is actually where it is best spent.
2. Make your plan: Okay, this is the budget. You couldn't avoid it for long. The word budget can trigger a lot of resistance, but it is a critical step if you want to start spending with intention. Planning can also help with smaller steps like grocery shopping -- impulse buying will wreck your budget. Only 50% of Americans make a budget. 
3. Revise the plan: Your budget isn't a "one and done" deal. At the end of the month look at what you thought you would spend and compare that to where you actually spent. Ask yourself if you could have avoided those expenses or if you could have planned for them. Only 13.5% of Americans take this step.
4. Shop around: Sure, maybe that grocery item is just 50 cents cheaper, but when you consistently shop around the savings begin to add up. You can (and should) shop around for big expenses too, like insurance, loans, utility providers, and bank accounts.

For more money saving tips, check out the budget hack category of our blog.

Sources:

StudentLoanHero

USA Today

ValuePenguin

CNBC