Household Expenses: Types, Examples, and How to Compute

What Are Household Expenses?

Household expenses are general living expenses, broken down according to the number of individuals in a household. They include the amounts paid for lodging, food consumed at home, utilities, clothing, and other costs. The sum of all the expenses is then divided by the number of family members residing in the house in order to find each member's share of the total expense.

Some household expenses qualify for tax deductions. For example, if you work from home and have an office there, you might qualify for the home office deduction.

Understanding Household Expenses

The items associated with household expenses include a broad range of recurring purchases. These include housing, food, transportation, clothing, and child care.

Types of Household Expenses

Home Expenses

In addition to the cost of housing—whether it is rent or mortgage payments—household expenses also include real estate taxes, fees for utilities such as electricity and gas, and insurance for the property.

The needs of each person accounted for in the household are also tallied up in these costs. These needs include the cost of prescription medicines and other healthcare fees.

Child-Related Expenses

Expenditures for education such as tutoring services, the purchase and maintenance of school uniforms, textbooks, personal computers, stationery, and pens are all included as household expenses. Tuition, whether for private schools or universities, may be included as expenses carried by the household because the student typically relies on a parent or guardian to pay such fees.

Childcare services, such as hiring babysitters or paying for daycare for young children while parents are at work, are included in household expenses as well.

Transportation Expenses

Transportation fees, such as the cost of leasing or buying a car through installment payments, commuting costs to work, and other services used by members of the household to get around, such as taxis or buses, can be counted as expenses to the household. Legal fees for members of a household, whether for consulting services or litigation, may also be included as well.

Entertainment Expenses

Costs for leisure and pastimes might be part of a household's regular expenditures. Nights out at the movies or subscription television services are part of entertainment purchases for the household.

The money spent on vacations, costs to participate in hobbies such as procuring collectible items, and fees for club memberships also add to these expenses. However, the necessity of such expenditures may come into question when budgeting to maintain the necessities of a household, particularly if there is a decline in personal income. If household expenses surpass your capacity to pay them, you may incur increased debt and confront more extensive consequences.

The Internal Revenue Service lists the expenses that qualify for a tax deduction. To claim a tax deduction, keep meticulous records and all receipts so that you are ready to fill out the required forms at tax time.

The Bottom Line

Household expenses represent a per-person breakdown of general living expenses. They include the cost of housing, food, healthcare, transportation, and entertainment. These are all costs that should be included in a household's budget to ensure that all members' needs are met each month.