I frequently claim that the average American family spends roughly $53,000 per year. A few folks have dropped a line to ask how I came up with that number. Simple. Whenever I cite figures about American earning, saving, and spending, I get them from the U.S. government. In this case, I used the Consumer Expenditure Survey (or CEX) from the U.S. Bureau of Labor Statistics.
Here’s how the BLS website describes the Consumer Expenditure Survey:
The Consumer Expenditure Survey program consists of two surveys, the Quarterly Interview Survey and the Diary Survey, that provide information on the buying habits of American consumers, including data on their expenditures, income, and consumer unit (families and single consumers) characteristics. The survey data are collected for the Bureau of Labor Statistics by the U.S. Census Bureau. The CEX is important because it is the only Federal survey to provide information on the complete range of consumers’ expenditures and incomes, as well as the characteristics of those consumers.
The Consumer Expenditure Survey is the only reliable source I’ve found about actual spending habits. Most similar projects have much smaller sample sizes and/or provide theoretical numbers. The CEX is a great way to develop a descriptive budget (one that deals with real behavior) instead of a prescriptive budget (one that pushes an agenda).
Naturally, the CEX has its drawbacks. As always, averages (and medians) only provide a limited view of a dataset. Plus, what might be true for an entire population (a country, in this case), probably isn’t true for a small subsection (your state or city, for instance). Still, for looking at the Big Picture, nothing I’ve found beats the Consumer Expenditure Survey.
Let’s take a closer look at the CEX — and what we can learn from it. [Read more…]