What Are Household Expenses?
Household expenses are general living expenses, broken down according to the number of individuals in a household. They include the amounts paid for lodging, food consumed at home, utilities, clothing, and other costs. 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 share of the total expense.
Some household expenses qualify for tax deductions. For example, if you work from home and have an office there, you might qualify for the home office deduction.
Key Takeaways:
- Household expenses represent a per-person breakdown of general living expenses.
- Household expenses can be largely categorized as home-related and child-related, as well as those for transportation and entertainment.
- The largest household expense for most Americans is housing.
- Household expenses need to be taken into account when setting up a budget.
Understanding Household Expenses
The items associated with household expenses include a broad range of recurring purchases. These include housing, food, transportation, clothing, and child care.
Types of Household Expenses
Home Expenses
In addition to the cost of housing—whether it is rent or mortgage payments—household expenses also include real estate taxes, fees for utilities such as electricity and gas, and insurance for the property.
The needs of each person accounted for in the household are also tallied up in these costs. These needs include the cost of prescription medicines and other healthcare fees.
33.3%
The percent that Americans spent on housing in 2022 (the latest data available), which was the largest component of household spending in the U.S.
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 litigation, may also be included as well.
Entertainment Expenses
Costs for leisure and pastimes might be part of a household's regular expenditures. Nights out at the movies or subscription televisionservices are part of entertainment purchases for the household.
The money spent on vacations, costs to participate in hobbies such as procuring collectible items, and fees for club memberships also add to these expenses. However, the necessity of such expenditures may come intoquestion when budgeting to maintain the necessities of a household, particularly if there is a decline in personal income. If household expenses surpass your capacity to pay them, you may incur increased debt and confront more extensive consequences.
The Internal Revenue Service lists the expenses that qualify for a tax deduction. To claim a tax deduction, keep meticulous records and all receipts so that you are ready to fill out the required forms at tax time.
Are Groceries a Household Expense?
Yes, groceries are considered a household expense, along with other expenses such as rent or mortgage payments, utilities, cell phone bills, and transportation costs. They are all the essential costs of running a home.
What Is the Largest Household Expense in the U.S.?
Generally, the largest annual expense for Americans is housing, whether it is owned or rented. Housing expenses include the cost of dwellings, utilities, supplies, and furnishings, according to the Bureau of Labor Statistics survey of Consumer Expenditures for the U.S.
What Household Expenses Can You Claim on Your Taxes?
If you itemize your deductions when you file your taxes, you may be able to deduct mortgage interest and property taxes up to specific limits. In addition, if you use a home office exclusively for self-employment or business use, you can deduct a portion of your home-related expenses, including utilities.
The Bottom Line
Household expenses represent a per-person breakdown of general living expenses. They include the cost of housing, food, healthcare, transportation, and entertainment. These are all costs that should be included in a household's budget to ensure that all members' needs are met each month.
