Life is expensive, but just how expensive is it?
We set out to answer “How much does life cost?” to provide an idea of the average cost of living for most Americans.
The answer is eye-opening. Even the most basic necessities, like food, housing, and utilities, cost thousands of dollars.
Tracking the Average Cost of Living
Billion Photos via Shutterstock.com.
We first dug into the research back in 2020. Back then, we discovered that life costs about $45,000 annually. We revised the data in 2022, and with the rampant inflation experienced in the early 2020s, the cost of living soared to nearly $56,000 in those two years.
It’s time to revisit the cost of living yet again. Here’s how much life costs in 2025.
How Much Does Life Cost in 2025
Vitaliy Abbasov via Shutterstock.com.
Inflation cooled in recent years, but prices continue to rise. The inflation rate now rests around 2.1%, down from its high of nearly 10% in the early 2020s.
That means life is still getting more expensive, but at a slower rate. So what does that mean for the cost of living in 2025?
How Much Does it Cost for the Average Person to Live?
To find out how much life costs, we will consider basic living expenses like food and shelter, in addition to services used by average Americans, like transportation and entertainment.
Keep in mind that all our numbers are averages, and not all costs will apply to all people.
Basic Living Expenses
Food and shelter comprise the basic living expenses because we need them to live. We also include utilities, as they’re essential to shelter.
How much do basic living expenses cost in 2025?
How Much Does Housing Cost?
Housing is the most significant expense for most people, and the one with the biggest increase. In 2025, the average American pays $1650 per month in rent.
Keep in mind that these prices are skewed by in-demand cities. Smaller towns will have lower rents.
Choosing to buy a house can be even more expensive. According to Redfin, the average monthly mortgage payment hit an all-time high of $2807 in the spring of 2025. Of course, this high cost is for new homes. Americans lucky enough to buy before the 2020 boom and subsequent rise in interest rates are paying far less. The median in 2019 was $1609 per month, and many still have these lower payments.
Keep in mind that buying a home includes additional costs, such as homeowners’ insurance, HOA fees, PMI (primary mortgage insurance), and maintenance costs.
Average Cost of Housing
To get the best idea of what housing costs, we will average the cost of rent vs. the cost of buying in 2025, for a total of $2228 per month.
Annual Cost in 2025: $26742
Annual Cost in 2022: $19356
Annual Cost in 2020: $16860
Total Increase since 2020: $9882
The average cost of housing soared by nearly $10,000 in the past two years, especially for those who want to buy. For renters, it only rose by a few hundred dollars.
Save Money on Housing
To save money on housing, Nathan Mueller, MBA, Financial Planner, recommends moving into a smaller place or finding a cheaper neighborhood.
Other ways to save include renting a room, getting a roommate, living with family, or even moving to a lower-cost-of-living state.
If house hacking or moving is not in the cards, you can also consider increasing your income with side hustles or asking for a promotion at work.
How Much Do Utilities Cost?
Shelter is just one part of the housing story. We also need electricity, gas, sewage, water, and trash pick-up. Many rentals include some utilities (usually sewer and trash) with the rent, but homeowners are responsible for all of them.
According to Home Guide, Americans pay between $275 and $610 a month for utilities.
The data includes average electric, water, sewer, gas, and trash removal, but excludes cable, internet, and phone services, as those are not necessities.
Remember that not everyone pays all of these costs, and prices vary widely by state. Electrical charges for those running central air in the Southwest will be far higher than those using window breezes in the Northeast. Gas and Oil for heating will be far more expensive in Northern regions than in Southern areas.
The costs listed are averages across the entirety of the US.
Annual Cost in 2025: $5310
Annual Cost in 2022: $4194
Annual Cost in 2020: $3900
Total Increase: $1410
Save Money on Utilities
To save money on utilities, consider raising or lowering the temperature by a degree or two to save on energy costs. Keep it at 74 instead of 68 in the summer, or 68 instead of 74 in the winter. Heating and cooling are two of the top energy-sucking budget busters.
In addition, consider running your heavy appliances at night when less power is used, and use cold water cycles for your laundry. Invest in Energy Star appliances and insulated windows to keep your energy in your home.
How Much Does Insurance Cost?
If you own your home, you must have property insurance. However, insurance to protect your personal belongings is also critical if you are a renter. Some landlords won’t let you rent if you don’t have a policy!
Due to increases in fires, hurricanes, and other natural disasters, plus soaring home costs, homeowners’ insurance rates have soared in recent years. On average, homeowners can expect to pay about $3520 to protect their homes.
Renters’ insurance is significantly lower, hovering at around $276 per year.
If we average these two numbers together, we see that Americans pay approximately $1898 per year to protect their homes.
Remember that homeowners are paying far more than renters for this essential living expense.
Average Cost in 2025: $1898
Average Cost in 2022: $1039
Annual Cost in 2020: $635
Difference: $1263
The difference between 2020 and 2025 is over $1200, but it’s important to note that homeowners pay the brunt of this cost. Renters only pay about $100 more.
Save Money on Insurance
The best way to save money on insurance is to shop around. Many companies offer lower introductory rates for new customers. Others offer great deals if you bundle home and car insurance.
You may consider the whopping difference between homeowners’ insurance and renters’ insurance and decide to switch to renting.
However, viewing the total cost of living is essential before making a drastic move. If you purchased your home before 2020, you are likely paying less overall than you would if you switched to renting in 2022.
How Much Does Food Cost?
Americans continue to feel pain at the grocery store as food prices rise, spending a whopping $1246 per month on groceries (for a household). The number includes food and other essentials like personal care items and household supplies.
Everyone doesn’t always eat at home all the time, so it’s vital to include meals out as part of the yearly overall food costs. The US Bureau of Labor Statistics’ Consumer Index Report indicates that Americans spent an additional $378 per month on food away from home.
Annual Cost in 2025: $19488
Annual Cost in 2022: $11280
Annual Cost in 2020: $8691
Total Difference: $10797
How to Save Money on Food
The difference in food costs from 2020 to 2025 is staggering, and consumers are unlikely to see much relief. To save money on food, consider cutting back on meals out, skipping expensive sugary drinks, and switching to generic products.
Although pre-made foods are convenient, they are more expensive, so if you have time, opt for dried beans and fresh vegetables rather than canned goods or pre-sliced perishables. Buying in bulk may also provide relief if you can afford it. Consider all the ways to save money at the grocery store to reduce your food costs.
What is the Cost of Living?
When we add it all together, we find that the average cost for living expenses is $53,438 in 2025, nearly $20,000 more than in 2020. That’s just for basic survival!
We all know those aren’t the only things we have to buy. When figuring out how much life costs, we have to determine how much everything else costs, too.
How Much Does the Rest of Life Cost?
The average American also has a car, internet, cable, and likes to have fun now and then. They also have to pay for miscellaneous items and maintenance for their cars or homes (or themselves) over the year.
Determining how much these extras cost will give us a better idea of how much life really costs.
How Much Does 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.
How Much Does a Car Cost?
To calculate how much life costs, I’m going to assume that the average American has a car. I know that many people rely on public transportation, and those costs are generally lower, but I’m not doing a scientific study here. We are working with generalities and averages.
According to Lending Tree, the average American can expect to pay around $742 per month for a new car and $525 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 spend $633 per month on auto loans, which is $7602 per year.
Annual Cost in 2025: $7602
Annual Cost in 2022: $6792
Annual Cost in 2020: $5670
Total Difference: $1932
Save Money on Transportation
Americans spend so much on transportation because they insist on buying expensive cars. A list of the top car models sold shows expensive pickup trucks and SUVs in the top five.
You could save a lot by trading in that costly pickup truck for a cheap sedan.
Americans also love getting new cars. You don’t need to trade in your vehicle every few years. Instead, keep it for as long as you can, so you don’t have to make any car payments.
If you live in a city with public transportation, consider getting rid of the vehicle altogether to save even more money.
How Much Does Gas Cost?
The cost of gas varies widely, not only from state to state but from month to month as well. According to the Bureau of Labor Statistics, Americans spent an average of $276 per month on gas in March and $284 in April. Last year, the April average was over $300.
To get a reasonable estimate of 2025 gas prices, we’ll simply average March and April to get $280 a month.
Annual Cost in 2025: $3360
Annual Cost in 2022: $5000
Annual Cost in 2020: $1000
Total Difference: $2360
How to Save Money on Gas
Though gas is down from its peak, it’s still more expensive than it was five years ago.
To save money on this essential expense, consider driving less. Explore rideshare and carpooling options, take public transportation if available, and try to limit your trips to grocery stores.
Saving on gas might be another bonus to trading your gas-guzzling pickup in for a more economical sedan.
How Much Does Car Insurance Cost?
The cost of car insurance also varies widely by state (and by driving record, age, etc.). However, according to a study by US News, the average annual cost is $2068. Some states, like Florida, have much higher overall rates, while others are much cheaper.
Annual Cost in 2025: $2068
Annual Cost in 2022: $1553
Annual Cost in 2022: $1621
Total Difference: $447
How to Save Money on Car Insurance
Insurance rates must rise to keep up with the replacement costs of new vehicles. To lower your rate, consider driving a cheaper car, raising your deductible, or taking a defensive driver’s course.
Many insurance companies also offer discounts if you bundle their products. Shop around and get quotes from various providers to find the best deals.
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 will always need a significant repair or tune-up at the most inconvenient time.
According to Car Insurance, the average monthly maintenance cost hovers between $100 and $150 a month, for an average of $125.
The cost varies widely depending on how old the car is, how well maintained it is, and the make & model.
Annual Cost in 2025: $1500
Annual Cost in 2022: $1200
Annual Cost in 2020: $408
Total Difference: $1092
Save Money on Car Maintenance
On average, older cars cost more to maintain than newer cars. However, if you don’t have a car payment, trading in an older car with higher maintenance fees will not likely save you more money. The best thing to do is to ensure you pay for regularly scheduled maintenance like oil changes, tire rotations, and tune-ups as soon as they are due. These routine repairs can save you a lot of time and heartache.
Sedans are also less expensive to maintain than luxury cars and pickup trucks. Trading in a luxury vehicle for a cheaper, more functional car can save you money on car payments, gas, and maintenance over the vehicle’s life.
How Much Does Entertainment Cost?
The last significant cost of life is entertainment. Most Americans spend at least a little money doing something fun, whether it be cable, internet, or going out and doing things.
I include 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.
How Much Do Cable & Internet Cost
A lot of companies bundle cable and internet, so we’re exploring the joint cost. According to Home Guide, the costs can range from $85 to $195 per month for both utilities, for an average of $140.
Annual Cost in 2025: $1680
Annual Cost in 2022: $2609
Annual Cost in 2020: $1764
Total Difference: -$84
Save Money on Cable and Internet
As streaming becomes more enticing and fewer people bundle their cable and internet, the costs are coming down.
The best way to save money is to cut cable altogether, as it’s rarely a better product than the streaming services.
Streaming Services
As more companies enter the streaming landscape, Americans pay more and more for the service to get the content they love.
According to Deloitte, Americans subscribe to an average of four streaming services and pay approximately $69 per month combined.
Annual Cost in 2025: $828
Annual Cost in 2022: $444
Annual Cost in 2020: $348
Total Difference: $480
Save Money on Streaming
The savings on cable were replaced by spending in streaming, and the costs continue to rise. It’s almost not a better deal anymore.
But part of that is because people have so many streaming services. You can only watch one thing at a time, so why pay for four? Sign up for Hulu, watch everything you want to watch on the platform, then cancel it and sign up for something different. This way, you only pay for one streaming service at a time.
Miscellaneous Entertainment
According to the Fool, Americans spend approximately $303 per month on entertainment, for a total of $3636 per year. The Fool’s entertainment category includes pets, toys, hobbies, recreational equipment, and tickets/fees for recreational activities.
Annual Cost in 2025: $3636
Annual Cost in 2022: $2916
Annual Cost in 2020: $3203
Total Difference: $433
Miscellaneous entertainment costs rose less than most of the other costs, but it’s easy to see why. As Americans tighten their belts to pay for higher housing and grocery costs, they can’t afford to have as much fun.
Life Is Expensive
In 2025, life costs over $74,000 annually, which doesn’t even include taxes, health insurance, life insurance, or child care.
Average salaries, which haven’t kept up with inflation, don’t cut it. The average salary is only $61,000, meaning most Americans can not afford life by themselves.
Of course, all the costs are averages, and a lot of people can get by on way less, but what’s the point if you can’t maintain a reasonable standard of living? And we wonder why Americans are so angry.
With all the political uncertainty due to tariffs and potential cuts in government services, the cost of living will probably continue to rise in the near term. The situation is already untenable for most Americans – hopefully, things improve before we reach a boiling point.
Really interesting read and blog idea. Well done on the research, too!
Thank you! This one did take a lot of research, thanks for acknowledging it!
Hey Melanie! Thanks so much for this post and all the research you did. Very eye opening to see how expensive everything is! Yikes! It was interesting for me to compare myself to the average and see if I was ahead. We cut cable ourselves and I don’t miss it either. Awesome post!
You’re welcome! It was insane to see all of the averages…stuff really is freaking expensive! I’m glad you enjoyed it!
Wow! This is really detailed and helpful!