Inflation in the US taking a hefty toll on households, recent reports show that most Americans are using their savings just to make ends meet.
54% of Americans Are Using Savings Amid Inflation To Make Ends Meet (PHOTO: Business News – Crast.net)
Inflation In Us
The prices continued their upward momentum in January, rising 0.5% for the month and 6.4% over the past 12 months, according to the latest consumer price index data released by the U.S. Bureau of Labor Statistics. To make ends meet, 27% of Americans stated that they’ve had to take money out of savings and more than half, or 54%, said they used that money to pay for daily expenses, such as groceries and rent, according to the recent Country Financial Security Index.
Roughly 64% of Americans are now living paycheck to paycheck, according to a LendingClub report up from 61% a year earlier and in line with the historic high first hit in March 2020. Overall, people feel less financially secure than they did at the end of 2022, Country Financial also found. Although wage increase is high by historical standards, it isn’t keeping up with the raised cost of living.
Average hourly earnings fell 0.2% in January and were down 1.8% from a year ago, according to a separate BLS report that adjusts wages for inflation.
Here’s How To Stay On Track
Howard Dvorkin, CPA and chairman of Debt.com. said that there’s a great deal of economic risk at the moment and people are borrowing from the future or someone else to cover expenses, an economic slowdown could be worse. Moreover, experts usually suggest starting with a basic budget. “With utilities, rent, and food all at record-time highs, anywhere you can plug a funding leak will support you improve your cash flow,” Dvorkin said, especially when it comes to high-interest debt.
Credit card rates, in particular, are now near 20%, on average a record. Those annual percentage rates will keep rising, too, as the Federal Reserve continues increasing its benchmark rate. If you currently have credit card debt, tap a lower-interest personal loan or 0% balance transfer card and refrain from putting additional purchases on credit unless you can pay the balance in full at the end of the month and even set some money aside.
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