What are Household Expenses?

Household expenses represent a per-person breakdown of general living expenses. They include the amount paid for lodging, food consumed within the home, utilities paid and other expenses. The sum of all the expenses is then divided by the number of family members residing in the house in order to find each member's part of the total expense.

Understanding Household Expenses

If you have a "head of household" status, you can enjoy a larger standard deduction and lower tax rates. The items associated with household expenses include a broad range of recurring purchases.

Types of Household Expenses

Home expenses. In addition to the cost of the housing, whether it is rent, a mortgage payment, or real estate taxes, fees for utilities such as electricity and gas as well as insurance for the property are also part of household expenses. The needs of each person accounted for in the household also fall under these costs. This includes the cost of prescription medicines and other healthcare fees.

Child-related expenses. Expenditures for education such as tutoring services, the purchase, and maintenance of school uniforms, textbooks, personal computers, stationery, and pens are all included as household expenses. Tuition, whether for private schools or universities, may be included as expenses carried by the household because the student typically relies on a parent or guardian to pay such fees. Childcare services, such as hiring babysitters or paying for daycare for young children while parents are at work, are included in household expenses as well.

Transportation expenses. Transportation fees, such as the cost of leasing or buying a car through installment payments, commuting costs to work, and other services used by members of the household to get around, such as taxis or buses, can be counted as expenses to the household. Legal fees for members of a household, whether for consulting services or for litigation, may be included as well.

Entertainment expenses. Costs for leisure and pastimes might be part of a household's regular expenditures. Nights out to the movies or subscription television services are part of entertainment purchases for the household. The money spent on vacations, to participate in hobbies such as procuring collectible items, fees for membership in clubs also add to these expenses. However, the necessity of such expenditures may come into question when budgeting to maintain the necessities of a household, especially if there is a decline in personal income. If household expenses surpass the capacity to pay them, increased debt and more extensive consequences may occur.

Key Takeaways

  • Household expenses represent a per-person breakdown of general living expenses.
  • A “head of household" status gives you a larger standard deduction and lower tax rates. 
  • Household expenses can be largely categorized into home-related, child-related, transportation, and entertainment.