March 20th, 2025 | 12:00 PM MST
Written By: Teresa Milner | Senior Wealth Management Advisor with Pearl Capital Management
The average American wallet juggles a complex financial picture, from managing debt to planning for the future. Meanwhile, the U.S. wallet manages trillions of dollars in revenue and expenditures annually. The scale of these two wallets couldn’t be more different, yet they share strikingly similar challenges.
To break this down and point out the key differences, let’s put this complex financial picture into four key categories – Income, Expenses, Debt, and Savings.
1. INCOME: Who Makes More?
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- The U.S. government’s income comes primarily from taxes – income taxes, corporate taxes, payroll taxes, etc. In 2023, the government collected $4.4 trillion in revenue.
- The median household income for an average American in 2023 was $80,610.
- KEY DIFFERENCE: The U.S. government has multiple income streams, while the average citizen typically relies on a single paycheck.
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2. EXPENSES: Where Does the Money Go?
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- The main spending categories for the U.S. government are Social Security, healthcare, military & defense, interest on debt, and other expenses like education, infrastructure, etc. In 2023, total spending reached $6.1 trillion, clearly exceeding the $4.4 trillion in revenue.
- The typical annual household budget of an average American ranges from about $75,000 to $80,000.
- KEY DIFFERENCE: The U.S. government spends more than it earns. Many Americans do too, often relying on debt to cover shortfalls.
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3. DEBT: Perhaps the Elephant in the Room?
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- The U.S. government’s debt surpassed $33 trillion in 2023, largely due to borrowing to cover deficits.
- The average American, on the other hand, owed ~$103,400. This includes mortgages, credit cards, student loans, and auto loans.
- KEY DIFFERENCE: The U.S. can borrow indefinitely and even print money if they need to. The average American can’t!
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4. SAVINGS: How Do Emergency Funds Compare?
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- Unlike a traditional savings account, the U.S. government relies on borrowing and future revenues to cover emergencies.
- The average American has less than $1,000 in emergency savings.
- KEY DIFFERENCE: Both operate with little to no cushion. But while the U.S. government can raise taxes or issue treasury bonds to cover their financial shortfalls, the average American has far fewer options.
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At first glance, these two wallets may seem similar, but the financial tools available to each are vastly different. While the U.S. government has flexibility with borrowing and revenue generation, the average American must be disciplined and strategic with their financial planning.
The struggle is real – and the need for better financial management is universal. Do you think if the government had to live on a strict budget like the average American, it would approach its finances a little differently?
How do you manage your household budget?
This article was written by Teresa Milner, CDFA a Certified Divorce Financial Analyst who specializes in helping women navigate through divorce and into the next financial chapter of life. For more information, email her at CDFA@thepearlcapital.com.
