How does the average American household use their paychecks

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By: NathanielCopeland
on 26th Oct,2012

Essentially, this is nothing more than unnecessarily assuming more debt instead of lessening the current load.
How does the average American household use their paychecks


Micromanaging your finances efficiently is less about playing it smart and more about making a habit out of apportioning your income to meet your expenses. Most people get tangled up in the debt trap when instead of making an extra payment on the home loan they decide to splurge a little by using the money to make the down payment on a new car. Essentially, this is nothing more than unnecessarily assuming more debt instead of lessening the current load.

How each taxpaying citizen of the country is of course their own business but given the creeping rise in the rate of unemployment, inflation and the national debt load, you can either choose to ignore it or you can decide to sit down, review how you are spending your money and maybe sharpen some edges and chip away the rough ones.

Here is how the expenses of the average American is distributed:

Healthcare

It is a pretty well known fact that Americans pay more for healthcare per capita as compared to a vast number of other nations. Without any kind of personalMedicaregroup medical coverage to cover the cost of a minor surgery, you might have to shell out something between $3,500 and $48,151. Most people do not have that kind of money saved up for such emergencies. Some people do not even earn that much in a year. The average cost of prescription drugs comes to somewhere around $71.

Medical coverage and health insurance is an expensive affair and this year, the estimated average cost has been projected to be somewhere around the $20,000 mark. This would directly mean that now would be the perfect time to divert some of your funds and concentrate more towards paying for and increasing healthcare coverage for you and your family.

 Housing

This next item of expenditure is something which everybody is more or less familiar with. Mortgages and the monthly payments almost become a part of their lives, the ones who pay it, day in and day out. Buying a home is no cheap affair and the average house costs just a little less than $190,000. Paying with cash is an outright impractical idea and honestly speaking, if you are one of “the 47 percent”, the only way you can ever afford a new home is by getting a mortgage.

The average American family living in a capital city like New York pays around $4500 for renting a double bedroom luxury apartment. On the other side of the border, a Canadian family with the same means pay less than half (about $2200) for the same type of apartment in Vancouver. So you can easily conclude that a large part of household earnings in America either go towards paying rent or mortgage.

Food and clothing

This is one sector where America benefits from playing on the economics of scale. Mass produced goods in the form of clothes and retail chains in a free market economy not only creates near perfect competition but in the process, reduces the average cost to consumers. Surplus production can also be imported thereby adding to the national GDP as well.

Food in the United States is much cheaper as compared to a large number of countries and other parts of the world. Technological improvements paired with Federal subsidies have led to the availability of large quantities of inexpensive food material. Packaged and fast food, which is actually the more expensive option elsewhere in the world, is a cheaper option than cooking at home.

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