10 Different Ways 2020 Hurt the Average Family Budget

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One of the most popular posts here on Family Finance Mom is the example of a family budget, based on the 2018 Consumer Expenditure data released annually by the Bureau of Labor Statistics. This month, the BLS released the data for 2020, giving us a detailed look at just how 2020 – with the pandemic, lockdowns, and recession – impacted the average family budget… for better and for worse. Read on to catch the highlights, breakdowns by household type, educational attainment, income level and race, as well as a few interesting data points that stood out from this unique year.


The Average Family Budget in 2020

It should come as a surprise to anyone that the pandemic had a massive impact on the economy, and the average family budget in 2020. And just this month, the Bureau of Labor Statistics has just released the detailed data for 2020 consumer expenditures.

This detailed data gives us insights into how household incomes were impacted, as well as how consumer expenditures – and family budgets – changed too. And some of the findings might just surprise you!

Incomes Didn’t Actually Fall… But Spending Did

The 2020 Recession looked a little different than most. Typically during a recession, consumers pull back on spending, which leads producers to cutting employment, and incomes falling, which leads to consumers pulling back on spending even more.

This time, an abrupt shock to the economy – pandemic lockdowns – drove a very rapid change in consumer behaviors literally overnight. We still saw a big increase in unemployment, but quick action by the Federal government in the form of both expanded and extended unemployment benefits, as well as direct stimulus checks, more than offset any income losses.

So while household expenditures did fall, household incomes actually increased relative to 2019.

Average vs. Your Personal Experience

Whenever the major media shares data points from these government sources, they always talk about a single number – usually the average or median data point for the entire country.

I find it always helpful to frame this data with some perspective around the demographics behind it. I know we often think of ourselves and those around us as the norm, or average, when in fact we are biased by our immediate environment.

That’s also why I find it helpful to share this data beyond single data points, broken down across varying demographic categories, so you can find the bucket that most looks like your own household.

To put the data in perspective for you:

  • The median household falls in the $50,000-$69,999 income bucket, which has an average after-tax income of $58,115
  • Households are categorized by the highest educational attainment level of anyone in the household. 75% of households have completed some college, but fewer than half are college graduates
  • Racially, households are categorized by the race of the reference person, or the person responding to the survey. A person can also designate whether they are of Hispanic Origin, separately from race.
    • More than 2/3s of households are White, Not Hispanic
    • 14% of households indicate they are of Hispanic Origin. Racially, those of Hispanic Origin breakdown as 96% White, 4% Black
  • Last, but far from least, and the biggest takeaway for Family Finance Moms… remember that married households with children do not represent the majority of households in America – they are only 15% of households with children under 18, or 23% if we include those with children over 18

I highlight these demographic breakdowns only to give you perspective. How often do we talk about averages or medians and think the numbers sound off or lower than we expect? It’s because we think we are average, when we are not. Married households, especially those with children, have income far higher than the average of all households… but we also have higher expenditures.

How Much Income Varies by Different Demographic Categories

With the demographic breakdowns above as background, I’m always surprised by just how much household income varies by different demographic categories. It is important to note, as well, other demographic factors at play, like age, number of earners per household, and how educational attainment varies as well.

  • It’s well-known that the higher your educational attainment, the higher your income. But higher educated households also tend to have more earners per household too
  • It’s well-known that there are racial disparities in household income. But there are also differences in educational attainment, earners per household, and minority households also average younger in age than white households, another driver of income differences

How Stimulus, Unemployment Aided 2020 Income

Before we move on to how households spent their money and the average family budget, I want to highlight just how much incomes were aided by Federal benefits in 2020. All household types saw higher income than they otherwise would have in 2020.

Only two demographic groups across all the breakdowns saw after-tax income decline in 2020 vs. 2019:

  • Households earning $200,000 or more
  • And Married Households with oldest child under 6 – likely driven by someone staying home to handle children in the absence of childcare

These benefits continued and were expanded even further in 2021, with more stimulus checks paid out as well as the advanced payment of the expanded child tax credit beginning this summer. It will be critical to household income that employment continues to recover so that family budgets can stand on their own as these Federal benefits come to an end as we head into 2022.

What Did the Average Family Budget Look Like in 2020?

So just how did the average family budget break down in 2020?

With higher after-tax incomes, the biggest change was higher savings rates for almost all household types vs. 2019. By far, Housing is the largest expense category for all household types, followed by Transportation, Retirement Savings, and Food.

How 2020 Spending Changed for the Average Family Budget

While we know the average household in 2020 saw higher pre-tax income, largely thanks to direct stimulus payments and unemployment benefits, what households spent still declined.

Families with children reduced spending less than the average household overall and in different areas. The average family budget made bigger cutbacks on discretionary categories like Apparel (down nearly 30% vs. 24% for the average household overall), Food (down almost 12%), and Entertainment (down 12.6%).

However, the average family budget spent more relative to 2019 on Transportation, specifically driven by the purchase of new vehicles.

Most Dramatic Average Family Budget Spending Category Changes in 2020

If we dig into some of the sub-categories for the average family budget, we can see some more dramatic year over year changes.

Married families with school-aged children cut spending in 2020 on:

  • Public transportation, including travel, by more than 60%
  • Entertainment fees and services, like going to the movies, museums or Broadway shows by nearly 45%
  • Eating out by over 35%
  • Apparel by nearly 30%
  • Gas for cars by nearly 25%
  • Spending on personal care products and services, like hair and nail salon visits by 17%
  • Household operations, which includes costs for daycare, babysitters and preschools by almost 9%

On the flip-side, the average family budget with school-aged children spent more in 2020 on:

  • 6% more on Food at Home
  • 10% more on durable goods for the home, like household furnishings, appliances and equipment
  • 10.5% more on medical supplies
  • Over 25% more on initial outlays for new (or new to you) vehicle purchases
  • And the biggest year over year change – nearly 60% increase in spending on toys, hobbies and playground equipment – ie buying the kids anything they want to stay sane while trapped at home with them all day everyday!

How Does Average Family Budget Breakdown for Housing?

One question I often get asked when it comes to family budgets is how much of your income should you spend on housing. Digging into the details of the Consumer Expenditure Survey, we can see both what goes into housing expenses and what percentage of income it represents.

Related Post: How to Calculate How Much House I Can Afford?

A couple things to keep in mind as you look at this data.

  1. The “average” household is made up of a percentage of renters and a percentage of homeowners that varies by household type.
  2. The Consumer Expenditure Survey separates out mortgage interest from mortgage principal payment. Principal payment is reported separately as part of Other Financial Information.

I would use the categories as a guide for all the expenses to plan for – mortgage, property taxes, maintenance, repairs, insurance, utilities – but use the Housing PLUS Mortgage Principal number as the best estimate for overall cost. This tells you the average family budget spends 28-30% of income on housing.

Last, remember that the average family budget isn’t in the best shape financially, so to have enough to set aside for long-term savings goals, you may want to undershoot that target when looking at what you spend for housing.

How Did Savings Rates Incease… But Net Worths Decline?

Another interesting takeaway from the 2020 data also shows up outside general expenses but in the other household financial information.

Families spent a smaller percentage of their incomes, resulting in higher implied savings rates… so how come average household net worths declined?

Net worth is the sum of the value of all your assets, less the sum of all your liabilities. It is a measure of your actual wealth. If savings rates are up, that should increase assets, and we did see an 18.7% increase in average family assets. However, net worth also takes into account your liabilities.

While assets were rising, both through increased savings rates and likely home value appreciation as well, liabilities rose faster. This is likely due to a series of factors, including forbearances on student loans and mortages, credit card use, as families likely used credit while saving cash to protect against the uncertain economic future in 2020, as well as higher mortgage balances as home prices appreciated and interest rates dropped.

A first glance takeaway might lead many to believe the average family budget weathered 2020 well… with lower expenditures, higher incomes and higher savings rates. But bigger picture, from an overall financial perspective, most family households with children, lost net worth in 2020, which isn’t a sustainable trend long-term for a healthy consumer and economy.

How Does Your Budget Stack Up to the Average Family Budget?

Download easy to read and print PDF versions of the Average Family Budget broken down by Household Type (married, single, with or without children), Income Level, Education Level and Race.

How much has your family budget been impacted by all the events of the last 2 years? How does your budget compare to the average family budget? Don’t have a great budget started yet? Check out the Busy Moms Budget Workbook to guide you through building a budget that works for YOU!


For past average family budget data, questions about how the data is collected and where various spending categories may fall, as well as the latest on the Economic Recovery, check out these posts from Family Finance Mom below.

More questions? Join me for LIVE Q&A every Monday and Wednesday at 9AM ET on Instagram or catch the replays on IGTV!

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About Meghan

Meghan spent nearly a decade as a Financial Analyst, before spending the last 7+ as a SAHM to three little ones. She shares simple money tips for moms to help your family reach your financial goals by building a financial plan you can LIVE with! You can learn more about her background in finance, catch her daily on Instagram and Facebook, and her weekly live discussions in her community for Family Finance Moms.

1 Comment

  1. What Does the Average Family Budget Look Like? on September 28, 2021 at 10:34 pm

    […] Get the latest 2020 data for the Average Family Budget HERE! […]

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