The average American household spends $5,102 a month on expenses, according to data from the Bureau of Labor Statistics.  

Most of these household expenses we can’t eliminate completely. Regardless of whether you rent or own your home, you have to pay for electricity and water. With more people working from home, a cell phone plan and stable internet connection are also must-haves. Of course, we have to eat as well. 

However, for the bills we have to pay regularly, there are ways to reduce how much of your budget goes toward them. The more money you can save on these recurring bills means more money you can put toward your emergency fund or savings account.

Top household expenses

Most household expenses are considered fixed expenses. A fixed expense is a bill that doesn’t change at all, or very little, and occurs on a regular basis such as monthly or annually. For most of us, a mortgage or rent payment is the largest monthly household expense.

Other common fixed expenses include insurance, utilities, loans, home services and debt.

Monthly fixed expenses

Mortgage or rent. Housing can account for as much as one-third of your monthly spending. If you live in a big city, you are likely to spend even more on rent or a mortgage. The BLS data report the average monthly spending on housing is $1,674.

Homeowners insurance. For a homeowners insurance policy with $300,000 dwelling coverage and a $1,000 deductible, the average annual premium is $2,305. Or $193 a month. If you have a mortgage, your lender likely requires you to have homeowners insurance. The payment is often wrapped into your monthly mortgage payment. 

Even if you don’t have a loan, insurance is a good idea as it protects your home or condo if it’s damaged in a fire or natural disaster. It’s also important to maintain insurance if you’re renting your home. A renters insurance policy is relatively inexpensive and provides coverage for everything from your furniture and appliances to your electronics and jewelry. 

How to save money: Ask your homeowners insurance company what discounts they offer. It might pay off to install a home security system or upgrade your heating, plumbing or electrical systems. 

Auto insurance. Auto insurance is mandatory in almost every state (New Hampshire and Virginia being the exceptions), and it’s a bill people tend to pay without thinking about. However, the set-it-and-forget-it mindset means you could be overpaying for auto insurance. Your premiums have likely increased over the years. According to The Zebra’s State of Auto Insurance report, premiums have increased almost 30% since 2011. What’s more, you could be paying for coverage you don’t need. 

How to save money: Review your auto insurance policy for coverage options you don’t need. For instance, if you have rental car insurance and have never used it, get rid of it. The easiest way to combat rising car insurance rates is to compare rates regularly. Get a few quotes to make sure you’re getting the lowest rate for the most coverage.  

Utilities. Electricity, water, garbage/sewer and gas are monthly expenses we can’t avoid. If you’re looking for a new apartment or home, ask the realtor or previous owner for an estimate of how much they spend on their utilities. Be sure to budget for any spikes in the summer or winter months. 

Student loans. Congratulations, you graduated college! However, along with a diploma, most graduates leave college with a serious amount of student loan debt. Collectively, Americans owe over $1.64 trillion in student loans and the average monthly payment ranges from $200 to $299. 

Many graduates are struggling to make their student loan payments, but the recent government stimulus package has provided a six-month automatic no-payment period for those with federal student loan debt. Borrowers won’t have to make a payment toward their debt until October 2020.

How to save money: If you have private student loans, talk to your lender(s) to see if there are any state programs available that can help with payment relief. 

Home services. The internet, cell phone, cable tv and/or streaming services are how we stay connected these days. The average internet bill is $43 a month, and the average cell phone bill comes out to $99 a month. Add to that, any streaming services you pay for such as Hulu or Netflix.  

How to save money: Comparison shop for the services you need. If you aren’t locked into a contract, switching providers can save you money. If you have to stick to your current plan, ask about discounts or other ways to lower your bill. Many providers will offer a better rate just to keep your business.

Credit card debt. A credit card is a powerful tool. When used properly, a credit card can help you establish credit and protect against fraud. If you let your balance carry over from month to month and open new lines of credit, you are doing financial damage. 

The average credit card interest rate is 16%, according to CreditCards.com. In addition to paying more each month toward interest, you may notice your credit score drop. 

How to save money: Attack your debt using the debt snowball method. List your credit card debts in order of smallest to largest. Start by paying off the credit card with the least amount owed, and work your way up toward the largest debt.

Food. It’s likely that more than 10% of your budget goes toward staving off hunger. The average household spends $660 a month on food, including both buying groceries and dining out. 

Other expenses. Let’s face it, life can be expensive. You may also find chunks of your paycheck going to health care and child care expenses. Transportation costs like tolls, public transportation and car maintenance may also take up a good portion of your budget. Don’t forget about pet supplies and personal care items, either. 

Save for fun — now and later 

Savings isn’t necessarily a fixed expense, but it doesn’t hurt to think of it as one  you should budget for. Identifying all of your household expenses helps you to establish a budget and find areas where you cut back to save money. Consider putting that extra money into a savings account or money market account. 

You may want to open more than one type of savings account if you have a couple of goals. For instance, saving for retirement and saving to buy a home or purchase a new car. Having these larger goals can help keep you keep your spending manageable.