Americans are feeling the pinch of higher costs for nearly every aspect of daily living. From gas to groceries, many are now experiencing the challenges of paying more for raising a family than even just a year ago. Supply chain shortages stemming from the COVID pandemic coupled with increased costs for goods as well as higher wages to attract and retain employees have all attributed with the increase.
Many experts agree that most families are spending at least a couple hundred more monthly to keep up with rising prices. In fact, an approximate 7% surge in prices was the highest price jump Americans have seen in almost 40 yearsˡ. Have inflationary prices impacted your household? If you’re like many households, then the answer is, “yes.”
According to the U.S. Bureau of Labor Statistics (BLS), the annual average wage for a full-time worker in the United States is $53,490 per year, which equals about $1,028 per week (for a 40-hour work week)². Although every situation is unique, additional expenses, like $200-$300 a month, can really impact the average American family’s lifestyle, household and college savings, and debt-to-income ratio (which ultimately can impact credit scores).
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What can families caught in the middle of it all do to help keep costs maintained?
“If higher costs are putting your family in a deficit, I’d recommend taking a realistic look at your budget,” said Angie Moleski, First Bank Product Management Officer and mother of three. “Are there expenditures each week or month that you could do without or no longer need? Consider doing an audit, much like a business, and assess. If you find expenses that you and your family cannot do without, then definitely keep them in, but perhaps cutting out extras like one streaming service at around $15 per month in addition to two or three dining out nights could be the boost that your budget needs.” She added it’s really all about finding the right balance between wants and needs each month.
“You certainly don’t want higher costs impacting your ability to find room to save for important future expenses, like college and retirement,” she said.
How Families Can Tighten Their Budgets
Stay focused. It may have been easier before inflationary prices went up to go through the month with less planning on how to spend; however, given the higher prices that Americans are now experiencing, it’s recommended to develop a plan. “From your savings strategy to learning to budget, it’s an ideal time to stay focused on where your hard-earned funds are going each month,” Moleski added.
Use technology to your advantage. There are countless digital resources available to help households manage their money better. “From financial calculators and online banking services to our mobile app, having well-informed, immediate access to your finances can really help families with their monthly planning,” she explained. “Not only can users set up automatic savings from their eBanking portal, but they can also pay bills and set up balance threshold alerts to be notified if their balance falls beneath the level they’ve established.” Having these easy, online tools help users avoid late payment and overdraft fees.
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“Also, be sure to check out discount and loyalty-programs from retailers you frequently shop at or even consider downloading reputable reward shopping apps,” she added. “Often, you can find loyalty shopping offers, coupons, discounts, rebates, and more for signing up.”
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Don’t let food eat up your budget. According to the U.S. Department of Agriculture, food cost is the second largest expense in raising a child4. Food is an easy place to find some room for improvement for most households. “Food costs can definitely be a difficult one to manage. If you aren’t already, start a weekly meal plan,” said Moleski. “Meal planning is an excellent way to make the most of your groceries without unnecessary waste or last-minute take-out due to lack of preparation.” Consider brushing up on cooking skills with online videos and resources for easy recipes that your family will like. There are also many apps and websites now available to help you with meal planning. In fact, there’s even one where you can input your on-hand ingredients and it will return a recipe that will work with them. “I’d recommend starting small with simple dishes and building up your culinary skills from there. Don’t be intimidated. With a little practice and patience, everyone can learn to cook.”
Plan your meals for the week and create a grocery list from there. Plan to utilize leftovers and account for any nights that your family won’t be at home to make your weeknights that much easier. Also, consider bulk cooking, freezing your meals ahead of time, doing one or two meatless nights, getting creative with leftovers, and taking advantage of ordering your groceries online. “Ordering your grocery list online allows you to see the totals, while also having access to your on-hand ingredients in your fridge and pantry,” she added. “This will eliminate buying items you don’t need.”
Refinance your mortgage. According to the U.S. Department of Agriculture, housing is the largest expense behind food for raising a child4. If you haven’t taken advantage of refinancing your home’s mortgage with a lower, fixed rate, it’s a good time to do so as rates are projected to rise this year in response to inflation. With approved credit, a lower, fixed-rate mortgage rate can potentially help you lower the cost of your mortgage payment each month, give you the opportunity to access the equity in your home for home repairs or updates, or even potentially reduce the length of time on your mortgage. Contact a First Bank Mortgage Home Loan Advisor to see what mortgage refinance option will work best for your situation.
Shop around. Shopping around for the best price or deal on almost anything is always a good way to manage a household’s monthly costs. Compare prices on nearly everything you purchase, especially those larger-ticket and recurring expense items. Shop around annually to get the best rates on healthcare costs, auto insurance, cell phone packages, life insurance, and more. Finding the best value for what you are already paying for is an efficient use of your household funds.
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If you’re ready to get started on the path to financial wellness, reach out to knowledgeable First Bank representative today. We can help you establish a financial plan to help you along your financial journey.
12022 Will Be More Expensive for Consumers, Joe Hickman, www.ky3.com/2022/01/03/2022-will-be-more-expensive-consumers
2Average Salary in the U.S., Jobted, www.jobted.com/salary
3Subject to credit approval. Ask for details.
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