Averages are a funny thing. I remember a teacher’s example: A guy had his head in the oven and his feet in the refrigerator. When asked how he felt, he said, “On average, pretty good.”
Averages can be an odd measure of things. Remember that 2.5 kids statistic?
On the other hand, averages help us see the big picture and understand our world in a specific context – average weight, average exam grade, average temperature, etc.
Let’s take a look at the average American from a financial point of view. (Sources range from years 2010-2012.)
1. Average American House
Owning your home is a unique part of our culture – one of the big American dreams. Homeownership is a forced savings method because as you pay down a mortgage, you build up equity and wealth.
Americans at Home
- Rate of homeownership: 66%
- Median home value: $149,300
- Number of people in household: 2.5
- Number of wage earners per household: 1.3
- Number of vehicles per household: 1.9
- Average size of home: 2,438 square feet
2. Average American Income
The money we use to give, save, and spend originates from our income. Individual and household incomes can vary greatly according to where you live. In NE Kansas, where I grew up, the medium income of the county is $31,971 while the median income of the community where we recently lived in the Bay Area of California is $118,713.
According to a December 2012 survey, 4 in 10 Americans are living paycheck-to-paycheck while 8% do not have enough to cover basic essentials.
- Median household income: $50, 054
- Average income before taxes: $63,685
3. Average American Giving
Giving of our time, talent, and treasure is a big part of our household financial picture. Individual giving (that includes family trusts) makes up nearly 9 out of 10 dollars donated. Many charities could not operate without the manpower provided by volunteers.
Giving of Treasure
- The average household contribution is $2,213 while the mean is $870.
- 65% of all households give to charity while 98% of high net worth households give.
- Donations are largely given to religious organizations (32%). Other major areas of donations include education (13%), human services (12%), and grantmaking foundations (9%).
Giving of Time
- Percentage of women who volunteer: 30%
- Percentage of men who volunteer: 23%
- Average value of a volunteer hour: $20.25
4. Average American Savings
Personal savings rate of American households is around 3.7%. Many families have little or no emergency savings to help weather a significant medical expense or loss of a job. Building up an emergency fund needs to be a high priority for any family that wants to build a good financial foundation.
Emergency Funds
- Average balance of a family’s savings accounts: $3,800
- Percentage of American families with no savings: 25%
College Savings
- Families saving for college that use a 529 plan: 27%
- Families that are saving for college will save an average of $11, 781.
- Families that expect to pay for all of a child’s college expenses from savings: 9%
Retirement Savings
Many reports show a big divide between how Americans expect to live during their retirement years and how they are saving toward that goal. The traditional pension plan is disappearing and Americans are going to need to save toward retirement through a workplace 401(k)-type plan or an IRA. One half of workers state they will work past the traditional retirement age simply to have access to a health care plan.
- Average savings balance for retirement: $35,000
- American workers than plan to rely only on Social Security in retirement: 20%
5. Average American Spending
A majority of our household income is spent on the basics of life. Let’s look at how a household with an average of $63,685 of income spends their money according to the Bureau of Labor Statistics.
Housing Expenses
- Average mortgage payments: 26% – 16,803
- Average spent on food eaten at home: 6% – $3,838
- Average spent on food eaten away from home: 4% – $2,620
- Average spent on apparel & services: 3% – $1,740
- Average spent on transportation: 13% – $8,293
- Average spent on health care: 5% – $3,313
- Average spent on entertainment: 4% – $2,572
- Personal Insurance and pensions: 8.5% – $5,424
6. Average American Debt
Over the past forty years, Americans’ dealings with debt has increased. Previous generations only used credit for large purchases such as a home or automobile. Today, it seems like anything can be purchased on credit with no money down.
- Household average debt: $54,000
- Average balance per open credit card: $1,157
- Average total credit card balance per household: $15,799
Student Loan Debt
A couple of decades ago, student loan debt was labeled as “good debt” because it helped you increase your lifetime earning potential. With the skyrocketing costs of college and difficulty with post-graduation employment, student loan debt is consuming a larger portion of the household budget.
- Average student loan debt for loan holders of all age groups: $24,301
- Percentage of student loan holders with at least one past due payment: 14%
How does this help you?
Averages are a funny thing. They can be more specialized by age, education, or where you live. An average house in rural Kansas costs much less than the average house in San Francisco. The average high school graduate makes less than the average college graduate. Averages can make us feel more comfortable with our situation or they can spur us into action.
Does knowing the average of something change your perspective? What financial habits keep you above average? Leave a comment!
Article By Cherie
Cherie is an accountant with a passion to teach others about personal finance.
