Out of sheer curiosity, we all like to know how much others make and how much they spend, but knowing how your spending habits compare to everyone else's has significant value.

Tutorial: Budgeting Basics

This information enables you to compare your spending habits to the average, giving you the opportunity to adjust your spending. A closer look at how your friends and neighbors are spending their cash will show you how you can trim your own expenses.

How People Spend
When you see people in your neighborhood driving a new car, at the mall buying clothes and everywhere else spending money, chances are you've wondered about how they are making that happen and what you can do to have those luxuries too. The report Consumer Expenditures In 2009, released by the U.S. Department of Labor U.S. Bureau of Labor Statistics, provides some answers to your questions.

This survey tracks the expenses of "consumer units," which are defined as "members of a household consisting of (a) occupants related by blood, marriage, adoption, or some other legal arrangement; (b) a single person living alone sharing with others, but who is financially independent, or (c) two or more persons living together who share responsibility for at least two out of three major types of expenses." Let's take a look at how these people, or units, spend their money.

Why It Pays to Know
According to the survey, the average consumer unit spends nearly 78% of its income on just seven major categories of spending. If you aren't a big fan of budgeting or keeping track of every cent that you spend, breaking down your expenses into these seven categories is a quick and easy way to take a snapshot of your financial situation. If you've never tried budgeting, comparing your expenditures to those of other consumers may be just the catalyst to get you started. (To learn more, read The Beauty Of Budgeting.)

The seven major categories of spending are listed in detail below. They are: housing, transportation, food, personal insurance and retirement, healthcare, entertainment, and apparel and services. Generally, for all costs except healthcare, the youngest and oldest among us spend the least, and numbers for persons aged 25-64 come in above the spending average.

1. Housing
Keeping a roof overhead costs the average consumer unit 26.9% of its annual income, which comes to an average of $16,895 each year. That's the biggest single category of spending by far.

If your housing costs appear to come in on the high side, it may be time to reevaluate your living situation. (To find out how to cut down your personal percentage of this category, check out McMansion: A Closer Look At The Big House Trend and Downsize Your Home To Downsize Expenses.)

2. Transportation
At 12.2%, transportation takes another big chunk out of the average consumer unit's income. The cost of owning a vehicle accounts for 4.2% of that number, excluding gasoline and oil, which add another 3.2% to the tab. In cash, the total average transportation expense for the year comes to $7,658 each year.

Owning a car brings with it the baggage of some big bills. If you can rely on public transportation, you can probably cut your costs in half, because purchasing a bus pass is often more inexpensive that paying for gas, maintenance, insurance and a parking pass. (If you've got no choice but to drive, check out Pros And Cons of Leasing Vs Buying A Vehicle, Wheels Of A Future Fortune and Shopping For Car Insurance.)

3. Food
Everybody has to eat, and doing so accounts for 10.1% of the average consumer unit's expenses. Food at home accounted for 6.0% of that number and food away from home accounted for 5.7%. The total cost of food comes at $6,372 on average.

If your food bill comes in on the high side, you can try to cut expenses by eating at home, taking a bagged lunch to work or holding group meals like potlucks instead of eating out.

4. Personal Insurance and Pensions
Although the personal savings rate in the United States is often cited as a negative number, 8.7% of income goes to fund personal insurance and pensions. Most of that number, 8.2%, goes to the Social Security Administration to fund payments for existing retirees. The average expenditure comes to $5,471 a year. (To learn more about Social Security, see Introduction To Social Security and Avoid The Social Security Tax Trap.)

5. Healthcare
Despite the high, and rising, cost of healthcare, this category only accounts for 5.0% of the average unit's income. The cash outlay comes to around $3,126 each year, but this category bucks the trend. Naturally, the costs rise as you age, with those over 65 paying nearly a third more than those under age 25. (Find out how to take action against one of the biggest financial post-work worries in Fighting The High Costs Of Healthcare, Failing Health Could Drain Your Retirement Savings and Common Concerns For Retirees.)

6. Entertainment
Everybody likes to have fun, but interestingly, paying for that fun accounts for just 4.3% of the average unit's income. That works out to $2,693 a year for the average consumer.

If your budget is really tight, this is the one spending area that you should initially trim as it is the one expense that's easiest to forgo. For example, cutting unnecessary services or staying home instead of going out can potentially put a few hundred bucks a month back into your pocket. (To learn more about saving your disposable income, check out Sneaky Strategies That Fuel Overspending, Define Your Personal Debt Redline and Squeeze A Greenback Out Of Your Latte.)

7. Apparel and Services
Keeping clothes on your back (on average) will cost you 2.7% of your income. For the average consumer unit, that's about $1,725 each year.

Shopping for bargains, avoiding the latest fashion trends, purchasing quality items in classic styles and shopping the seasonal sales can help you save a few dollars under this category.

Factoring in Location
Everybody knows that it costs more to live in some areas than others. The survey subdivides the data by geographical location, splitting it out into four regions. Overall, costs in the West were the highest in nearly every category, while costs in the South were the lowest.

To get a better idea of the costs for your region, particularly if you live in a pricey city like Los Angeles or in a small town, such as Addison, Alabama, you can use an online a cost-of–living calculator to compare your expenses to those in other areas of the country.

If you are looking to move, it pays to consider the geography. Simply living in the right location can significantly trim your costs.

Put Your Knowledge to Work
Knowing the average consumer numbers gives you a chance to see how you stack up against the rest of the country. While the specific dollar figures will change from year to year, the categories are unlikely to exhibit much change. Comparing your spending habits against these categories provides benchmarks to gauge your personal financial situation, and the opportunity to implement reductions in spending. Ideally, these reductions should result in freeing up some of your money, which can then be used to increase the amount you dedicate toward saving and investing.

To get started on the road to improving your financial scenario, read Six Months To A Better Budget.

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