The cost of living changes constantly.
We originally wrote this piece in 2020 to showcase how much life costs for the average American.
Although the original post is updated yearly to showcase rising costs and ensure people have current, up-to-date information on the cost of living, we decided to keep the original article as a historical record.
Here is the original data from 2020. Unfortunately, the vast majority of our old sources no longer exist or have been updated to reflect current data, so we’ve removed the broken links.
How Much Did Life Cost in 2020?
In 2020, the average cost of living for Americans was about $43,356 per year.
Remember that this number is an average for the entire United States—some places were cheaper, while others were far more expensive. Costs also vary based on household size.
But people need the same basic necessities no matter where they live—food, shelter, utilities, entertainment, transportation, and insurance are all necessities for modern living. So, how much did this cost in 2020?
How Much Did it Cost for the Average Person to Live in 2020?
Basic Living Expenses
At the very least, people need food and shelter to live.
How much did food, housing, and utilities cost in 2020?
How Much Did Housing Cost?
Housing was and remains the biggest financial burden for Americans.
According to CBS News, the national average rent in 2018 was $1405 per month. That means, on average, Americans spent nearly $17000 per year on shelter alone.
As averages can be skewed, I also looked at the median. Unfortunately, the story is only slightly better. According to a now-gone annual rent report, the median monthly rent for a 2-bedroom apartment was $1255—only slightly below the average.
Rents continued to increase in 2019 and into 2020.
Buying a house was a little cheaper, as the
If you chose to buy a house, you would be paying slightly less. The average cost of a mortgage in 2018 was $1022 per year. But, to get a mortgage, you need a hefty sum saved up for a down payment and good credit.
Since many Americans find home buying out of reach, I based my calculations on the average cost of rent.
Annual Cost in 2020: $16860
How Much Did Utilities Cost?
If you aren’t lucky enough to score a housing situation with utilities included, those are going to be the next most important thing on your list. Electricity, gas, sewage, water, and trash pickup all have costs associated with them. Many renters will have some of these (usually sewer and trash) included in the rent, but homeowners are responsible for all of them.
The yearly price of utilities for the average American was $3900, which excludes the annual cost of cable and internet. I didn’t include those because they aren’t essential living expenses. They are included in the total calculations for how much life costs below, though – because most people have them.
Annual Cost in 2020: $3900
How Much Did Insurance Cost?
The final cost under the housing umbrella is insurance. If you own your home, it is a must. However, insurance to protect your personal belongings is also extremely important if you are a renter. Some landlords won’t even let you rent if you don’t have a policy.
On average, homeowner’s insurance costs about $1083 per year, and renters insurance is significantly lower at $187 per year. I couldn’t find any hard data on what the average American actually pays to protect their belongings that weren’t split between these lines, so I will just average them myself for a total cost—which is probably widely inaccurate. But hey, this is just an estimated average, and I’ve got to use what I have.
Annual Cost in 2020: $635
How Much Did Food Cost?
You have to eat to stay alive, right? And food isn’t necessarily cheap. Sure, you can do extensive meal planning or live on rice and beans, but the average American doesn’t do that.
According to the Department of Labor, Americans spent an average of $7310 on food in 2020. This figure includes both dining out and cooking at home.
I also like to include the cost of personal care items in with the cost of food – because you are generally buying both at the grocery store. The same Department of Labor study showed that Americans spend an average of $646 on personal care items, which brings the total cost to $8691.
Annual Cost in 2020: $7956
What Was the Cost of Living in 2020?
The average cost of living in 2020 was $29351 per year, which is just for basic survival!
Life costs more than the basics.
Here’s everything else we needed to pay for in 2020.
How Much Did the Rest of Life Cost?
The average American also has a car, internet, cable, and likes to have fun every now and then. They also have to pay for miscellaneous items that pop up and maintenance for either their cars or homes (or selves) over the course of the year.
So how much did these other expenses cost?
How Much Did Transportation Cost?
Transportation costs are becoming more and more of a necessity. Unless you live within walking distance of your job and a grocery store, you will probably be paying for transportation in one way or another.
Car
To calculate the cost of life, I will assume that the average American has a car. I know many people rely on public transportation, and those costs are generally lower, but again, I’m not doing a scientific study here.
We are working with generalities and averages.
In 2020, the average American paid around $554 per month for a new car and $391 per month for a used car.
I couldn’t find any data on the combined average, so I’m just going to average those two numbers and assume that the average price overall is the average of those two. That means that, on average, Americans spent $472 per month on auto loans, which is $5670 per year.
Annual Cost in 2020: $5670
Gas
The cost of gas varies so widely by state that it’s hard to get a good estimate for the average American. In 2020, the average was close to $1000 per year.
Clearly, this isn’t the most scientific method, but it does give an idea of what the average American spent.
Annual Cost in 2020: $1000
Insurance
The cost of car insurance also varies widely by state (and by driving record, age, etc.). On average, Americans paid approximately $1621 annually for their car insurance.
Annual Cost in 2020: $1621
Maintenance/Miscellaneous
Everyone who has a car knows that problems will arise every year, even if you do get the oil changed regularly. Tires get flat, brake lights go out, and interiors get dirty. And it’s always going to need a major repair or tune-up at the most inconvenient time.
On average, these repairs and miscellaneous expenses cost car owners $408 per year.
Annual Cost in 2020: $408
Entertainment
Most Americans spend at least a little bit of money doing something fun, whether it be cable, internet, or going out and doing things. I’m including this because I don’t think life is worthwhile if you aren’t enjoying it at least a little bit, and unfortunately, most ways to enjoy life cost money.
Here’s what we spent on entertainment in 2020.
Cable & Internet
We are going to use the utility chart above to get the average costs of cable and internet. According to that, Americans spend $1200 per year on cable and $564 per year on internet. I ditched my cable a long time ago and haven’t looked back, but the average American still has it, so we will add those up to get the total yearly cost.
Annual Cost in 2020: $1764
Streaming Services
Cable is going away in favor of streaming services, but many Americans still use both. In 2020, the average American paid $29 per month for streaming services, which is $348 per year.
Annual Cost in 2020: $348
Miscellaneous Entertainment
What’s the point of living if you aren’t going to have some fun, right? The average American spends about $3203 per year on having fun. This includes things like going to the movies, going to bars and clubs, and even paying to get into theme parks, state parks, and things like that.
Annual Cost in 2020: $3203
Life Is Expensive
Adding it all up, we see that life cost nearly $45000 per year in 2020, which doesn’t even include taxes, health insurance, life insurance, or childcare.
It also doesn’t give a lot of wiggle room for actually enjoying life – three thousand dollars seems like a lot, but that’s only sixty dollars a week. You might be able to go out to a movie once a week, save up and go to a theme park once a month, or vacation twice a year. Not very exciting, is it?
Also, because this is a breakdown of what things cost, it doesn’t include any savings. Everyone should save for financial emergencies and long-term financial goals.
Life was even more expensive in 2020 when you add in all these extras.
Though the cost of living was high in 2020, it’s only increased from them. Hopefully this historic data helped you understand the rampant inflation we’ve been experiencing for the last few years and provided some historical insight into what living in 2020 was like.