Most UK households have the same major categories of expenses, which provide a roof over our heads, food in our bellies, clothes on our backs, and transport to and from work or school. We've analyzed data from the latest 2017 Living Costs and Food Survey from the Office of National Statistics (ONS) in order to better understand average spending levels across these major categories. Depending on where you live, your stage of life, and your financial circumstances, you may also be spending extra on childcare, college tuition or healthcare.
For an analysis of how spending changed between 2016 and 2017, please see our article Household Budget Winners and Loser in 2017: Transport, Household Goods, Restaurants & Hotels and Education.
Average Household Budget in the UK
The median disposable household income in the UK was £26,300 in 2016, according to the latest data available from the ONS. Here’s how the average household budget breaks down:
|Expenditure Category||Weekly Household Spend||Annual Household Spend||% of Budget|
|Housing (e.g., rent, mortgage interest payments, repairs, etc.)||£63.40||£3,297||11%|
|Food and non-alcoholic drinks||£58.00||£3,016||10%|
|Restaurants and hotels||£50.10||£2,605||9%|
|Recreation and culture (e.g., pets, gym fees, TV, etc.)||£46.70||£2,428||8%|
|Household (e.g., furniture, linens, appliances, etc.)||£39.30||£2,044||7%|
|Utilities (e.g., water, gas, electric, etc.)||£31.10||£1,617||6%|
|Clothing and footwear||£25.10||£1,305||5%|
|Personal (e.g., toiletries, jewellery, sunglasses, etc.)||£16.20||£842||3%|
|Vices (e.g., alcohol, tobacco, etc.)||£11.90||£619||2%|
|Money transfers and credit (e.g., cash gifts)||£11.90||£619||2%|
|Licences, fines and transfers (including road tax)||£3.70||£192||1%|
Average Cost of Housing
The average UK household spends £10,500 per year on all things related to housing. That’s an average of around £4,265 for direct payments on rent or mortgage interest, council taxes and insurance. The remaining £6,235 covers utilities and other household operational and maintenance expenses and equipment, as well as household goods and services. A full breakdown of average housing expenses is illustrated in the following chart.
Roughly 30% of UK households are mortgage-paying homeowners. These homeowners pay an average of £9,260 per year (approximately £180 per week) on mortgage interest, council taxes, maintenance, home improvements, utilities and homeowners/contents insurance (excluding household goods/services like furniture, appliances, cleaners, tools, etc.). The average mortgage payment also includes an additional amount each month (average of £4,410 per year) that goes towards the principal, effectively turning cash earnings into home equity.
Average net rent in the UK is £100 per week. Those who rent pay just a touch less than homeowners for the basics: rent, council taxes, utilities and renters insurance, at an average of £8,915 each year (excluding household goods/services). Keep in mind renters don't generally pay for maintenance or home improvements. This figure encompasses a wide range of rents from small towns all the way up to London, and reflects housing benefits and rebates.
|Rent or Buy? Comparing Non-Recoupable Costs||Average Annual Costs|
|Average annual cost to rent||£8,915|
|Average annual homeowners costs (excluding capital repayment and home maintenance/improvement)||£9,260|
This side-by-side comparison reveals that renters do indeed pay a touch less than homeowners in non-recoupable expenses each year. Keep in mind that homeowners do also pay over £1,360 per year in home improvements (e.g., new bathroom fixtures, central heating, refurbishment, etc.). These costs are considered capital improvement—that is, they may increase the value of the underlying asset, the house. As a result we don't include these amounts in our side-by-side comparison. As a financial decision, buying a home might only pay off if its underlying market value appreciates significantly over time.
Total costs for a regular roof over your head, whether rented or owned, typically eat up around 35% of an average UK household’s income. While the largest component of housing costs is rent or mortgage interest, a close second is the cost of utilities. The cost of Gas & Electric are by far our largest utility expense. Recent increases in the marketplace have led to a government push to encourage consumers to switch energy suppliers, in an effort to keep costs down.
Average UK Transportation Costs
The second largest cost for the average UK household, behind housing, is transport. We spend an average of £4,654 per year to get around, a 9% increase from 2016—this is more than the average household spends on rent/mortgage interest payments a year.
The largest component of our travel budget is operating our personal vehicles. We spend just over £1,000 a year on petrol & diesel per household, and the average cost of car insurance is £515 per year per household. The used car market is hot—we spend nearly twice as much money on used cars than we do on new! Those taking public transport spend £306 on average on bus, train and tube rides. Finally, holidays—the average household spends another £354 on airfares, mostly heading out of the UK.
Average UK Food Costs
The third largest segment of our budgets is food. The average UK household spends £3,000 a year on groceries and non-alcoholic drinks at home. Another £425 is spent on alcohol (mostly wine) for consumption at home. Eating and drinking out consumes a further £2,030 from our household budgets. All in, food and drink consume 19% of our total annual budgets.
While food is, of course, a necessity for life, it’s often considered a fungible category in a household budget. After all, a family could dine on spaghetti with a touch of homemade bolognese, for a low cost meal. Or we could go out to a London hot spot and drop a hundred pounds or more on one dinner.
To gauge a basic minimum for food costs, we can look at the budgets of our poorest households, who are presumably eating as cheaply as they can. Those households with disposable incomes less than £10,000 per year still spend about £2,330 annually on food and drink. They eat at home more often, spending around 75% of their food & drink budget for consumption at home, with a quarter of the budget spent out of the house. The highest earning households, those with more than £67,000 of annual disposable incomes, spend £9,700 on food & drinks, with nearly half of the budget spent dining out. For more details, see our article on Average Annual UK Food Spending.
One notable change in expenditures is the decrease in alcohol and tobacco spending over time. For the past few years, household spending on these vices has dropped below £12 a week.
Note: Updated in January 2018 to reflect the most recent Living Costs and Food Survey from the ONS.