Americans spend nearly a third of their income on ‘essentials,’ study finds

In the face of persistent economic uncertainty, a new report from doxo reveals just how much of the American household budget is consumed by essential bills. The 2025 U.S. Household Bill Pay Report estimates that the typical U.S. household spends $24,695 per year – or 31% of its income – on core living expenses, highlighting the financial strain many families face as basic costs continue to rise.

According to doxo’s analysis, The Bill Pay Economy of 2025 represents a staggering $4.55 trillion in annual consumer spending, with $3.45 trillion directed toward thirteen of the most essential household bills, such as mortgages, rent, insurance, utilities, and auto loans.

“This is a critical lens on American financial health,” said Liz Powell, senior director of INSIGHTS at doxo, in a press release accompanying the report. “With only 23% of Americans believing the current economy is faring well – the lowest in 12 years – it’s more important than ever to quantify the burden of household bills.”

The findings are based on tens of millions of actual bill payments across 97% of U.S. zip codes, offering unparalleled insight into what consumers really pay. The methodology, refined for 2025, now emphasizes median monthly costs for a more accurate view of typical household spending.

The biggest costs

Housing remains the most significant expense by far, with Americans paying a median of $1,775 per month on mortgages or $1,453 on rent. Auto loans, another major cost category, average $470 per month, surpassing what many pay for utilities or health insurance.

Here's how monthly median costs break down across key bill categories:

Mortgage: $1,775

Rent: $1,453

Auto Loan: $470

Electric: $120

Auto Insurance: $105

Health Insurance (out-of-pocket): $72

Cable & Internet: $121

Mobile Phone: $96

Water & Sewer: $86

Gas: $71

Waste & Recycling: $70

Life Insurance: $60

Alarm & Security: $74

These figures demonstrate that consumers are paying more each month for auto loans and internet than for health or life insurance, which are often partially subsidized by employers or deducted pre-tax.

Costs vary widely by state. Hawaii residents pay the most for electricity ($197/month), while Alaskans shell out the highest for gas ($136/month). Meanwhile, West Virginia offers some relief, boasting the lowest median mortgage ($1,019/month) and rent ($870/month).

Breakdown by states

Other notable state-level trends include:

Highest Auto Loan Payments: Nevada ($559/month)

Most Expensive Cable & Internet: Delaware ($157/month)

Lowest Health Insurance Costs (out-of-pocket): Georgia ($30/month)

Highest Alarm & Security Bills: West Virginia ($110/month)

These disparities illustrate how location can significantly influence household financial pressure.

In addition to standard monthly charges, American consumers lose an average of $1,495 annually to hidden costs such as late fees, overdraft penalties, and credit score impacts. Multiplied across the population, these hidden expenses add $196 billion to the overall cost of bill pay—an often-overlooked burden in household financial planning.