May 30, 2023

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Inflation fears force Americans to rethink financial choices: Survey

Inflation fears force Americans to rethink financial choices: Survey

Robin Beck | Afp | Getty Images

Soaring inflation has prompted Americans to reconsider how they spend their money.

The Consumer Price Indexwhich measures a broad basket of goods and services, jumped 7.9% In February 12 months earlier. Prices are rising for everything from the food you put on the table to the gas that powers your car.

This weighs heavily on people, with 48% thinking about higher prices all the time, according to A CNBC + Acorns Invest in You Survey, conducted by Momentive. The survey was conducted online March 23-24 to a national sample of 3,953 adults.

The survey found that three-quarters of them are concerned that higher prices will force them to reconsider their financial options in the coming months.

Inflation costs the average American household $296 per monthAccording to Moody’s Analytics analysis. Experts expect it to get worse before it gets better.

However, there was no significant impact on consumer spending Retail Slower than expected in February.

The biggest area people have cut back is eating out, with 53% saying they have done so, according to the survey. They also drive less cars and cancel monthly subscriptions, among other things.

If high prices persist, eating out, driving, and excursions or vacations are the top three areas for Americans plan to cut on more.

The past year has certainly been difficult for many. 52% said they are under greater financial pressure than last year. They are most concerned with gas prices, housing costs and food costs. Last year, gas prices rose 38%, shelter prices increased 4.7%, and food prices increased 7.9%.

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Meanwhile, a majority of Americans are unhappy with the White House’s response, with 61% disapproving of President Joe Biden’s handling of inflation.

Recession fears

Its current environment The majority of Americans concerned About a recession, with 81% of respondents believing it is likely to happen this year.

“People are definitely on edge,” said Mark Zandi, chief economist at Moody’s Analytics. Recession risks high.

He sets the odds at 1 in 3 and goes up.

When does inflation slow down?

Zandi explained that inflation was caused by the pandemic, which has caused a scramble for supply chains and labor markets, and was exacerbated by the Russian invasion of Ukraine, affecting gas and food prices.

“If that diagnosis is correct, as the pandemic fades and we get the other side of the fallout from the Russian invasion, inflation should go down,” he said.

Sailing at higher prices

Grace Carey | moment | Getty Images

The first thing you should do is deal with your financial situation.

Certified financial planner Ashton Lawrence, partner at Goldfinch Wealth Management in Greenville, South Carolina, said asking yourself a few key questions can help you see where you might be able to cut expenses.

“What does cash flow look like? What kind of debt, and how much debt are we looking at?” He said.

“It’s about making small changes and being in control of where you can control.”

More than invested in you:
Most Americans are worried about a recession this year
Here’s what consumers plan to cut if prices keep rising
Here’s how retirees can navigate higher rates

Once you see where you’re spending the money, break it down into needs and wants, and start cutting back on the optional things, said CFP Carolyn McClanahan, founder and director of financial planning at Life Planning Partners in Jacksonville, Florida.

McClanahan, who is also a physician, said that eating out all the time not only costs more money than cooking at home, it’s also not healthy. When you’re at the grocery store, use coupons and comparison shopping to help you save money.

There will be nights when time is tight and you tend to order takeout for dinner. McClanahan cooks big on Sundays and puts meals in the freezer for those nights.

Using cars or planning car trips to reduce driving can help with gas usage, as can working from home a few days a week, if at all possible.

McClanahan said that while it’s normal to worry about price hikes, you can’t control them — and worrying about it isn’t good for your health.

“Just think of the things you can control,” she said.

“Making sure you spend your money in a thoughtful way is the only thing you can do to help alleviate the outside world around you.”

adjust: Watch Sharon Epperson All day long on CNBC discussing recession fears, consumer spending and financial literacy in schools.

Participation: Money 101 is an 8-week educational course on financial freedom, delivered weekly to your inbox.. For the Spanish version Dinero 101, click here.

Disclosure: NBCUniversal and Comcast Ventures are Investors in oak tree fruit.