The Average Family Can Save Thousands by Cutting Back on Just Three Bills

The Economics of Happiness

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Economics will put you to sleep; just ask my wife. Merely editing a ten page paper I wrote in college on the collapse of the Bretton Woods monetary system put my wife into a long, mid-day slumber. Caffeinated tea was no use in stopping economics fatigue. However boring the practice of reading economics can be, some of the concepts are really useful for saving time and money in personal finances. The Pareto Principle is such a concept.

The general idea behind the Pareto Principle is that for any outcome, 80% of the results come from 20% of the effort. For example, roughly 80% of my daily blog reads come from roughly 20% of referring sites. I’d wager that if you checked your phone records, about 80% of the minutes you spend talking on the phone comes from about 20% of the people you call. This principle is great for making informed decisions about personal finances and where you should spend your time saving money.

Take the family budget for example. While the numbers aren’t quite 80/20, according to government statistics three expenses made up 63% of the average family budget: housing, transportation and food. Making only small reductions in each of these expenses could save you thousands each year and there is no shortage of ideas for you to choose from.

(Share your family budget by taking the Dollar Challenge)


There are many ways to avoid regrets surrounding your housing choice. Doing due diligence on a neighborhood will prevent issues with local crime and poor schooling. Housing expenses require a different set of financial tools.

The average American family spends 34.43% of their total expenditures on housing. By far, this is the largest expense for families to manage and while it may seem like costs are fixed, there are a number of ways to lower your monthly costs.


Transportation is about 1.4 percent of Money Crush’s family budget, while the average family spends about 15.6% of their expenses on transportation. In other words, there are many ways to cut back on car expenses.


I’ve spent a good deal of time writing about ways to reduce the 13% of the average family budget that goes to buying food. Coupons are popular right now, but there are many other ways to reduce family’s third largest expense.

There are countless ways to cut down on spending, but focusing on these three bills first will give you the greatest amount of savings.

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