Thursday , March 23 2023

Clever Alternatives – Saving Your Money

Clever Alternatives is focused on saving your money because it is important and for the average household in the United States, there is not too much money to go around.

Average household income in the United States was $53,657 in 2014

For the sake of simplicity let’s say $55K is the average household income in the United States, or $4583 per month.

The average cost of insurance is about 30% of income. Out of the average $55K household income, $16,500 of that is spent on insurance. The primary cost here is health insurance, then there is also auto insurance, home insurance, renters insurance, and life insurance.

Average Annual Insurance Costs for The Average Family in the United States is $16,500 or $1375 per month

We define finance costs as interest cost associated with financing long term and short term debt. A typical barometer for a mortgage payment as a percentage of income is 30%. Finance costs associated with a mortgage payment are approximately 50%. This number is much higher in the beginning of a loan and lower towards the end, but 50% is a decent estimate. If finance costs are half of your mortgage payment and your mortgage payment is 30% of your income then finance costs are approximately 15% of your income, which would be $8,250 or $687 per month.

In addition to mortgage financing, we have credit cards as well as student loans along with various other types of financing that the average person pays each month. Let’s say that these other types of finance costs account for 5% of income.

This brings the total financing costs each month to an average of 20% of income.

Average Annual Financing Costs for the Average Family in the United States is $11,000 or $916 per month. This DOES NOT INCLUDE the full mortgage payment, it is only the finance charges.

The average household in the United States makes $55K and has about $15K left in disposable income each year, or $1250 in disposable income each month.

It is estimated that energy costs account for roughly 15% of disposable income. These numbers vary widely depending on where you live. Energy costs are primarily fuel in your vehicle and electricity in your home. Based off of these numbers, energy costs for the average household is $2250 per year or $187 per month.

The average household in the United States pays about $2250 per year or $187 per month on energy costs.

In Summary: The average household in the United States that makes $55K per year, or $4583 per month will pay $30K per year, or $2500 per month on insurance, financing, and energy costs. 

At Clever Alternatives, we explore ways to help save you money on insurance, finance, energy, and energy costs.


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