June 14, 2024
93% of Americans Are Worried About Inflation. How Rising Prices Are Changing How We Spend and Save


Inflation is driving holes into wallets across America. After nearly two years of the Federal Reserve hiking rates and now holding them steady, inflation is still hovering above the Fed’s 2% mandate. And Americans are feeling the burn. 

A recent CNET survey found that US adults are cutting back on nonessential spending (53%) and leaning on credit (16%), such as credit cards and Buy Now, Pay Later plans, to make ends meet. 

Bola Sokunbi, founder of Clever Girl Finance and a member of CNET’s expert review board, doesn’t find it surprising. 

“People are seeing the effects of inflation in their day-to-day lives.”

Even though major retailers like Walmart and Target stores have started lowering prices on select everyday items, after nearly three years of higher-than-normal inflation, it isn’t enough to offset the cost of other bills and necessities that aren’t budging. Here are more findings from the survey and what else to know about inflation’s impact on financial goals. 

By the numbers

Inflation’s impact on each generation is different, whether in terms of saving for long-term goals or making ends meet. Here are some stats by generation to consider.

  • 37% of Americans are extremely concerned about inflation. By generation, Gen X and younger Boomers are extremely concerned (43%). 
  • Younger and older Boomers (59% each) have cut back on nonessential spending due to higher everyday prices, followed by Gen X (57%). 
  • Gen Z (23%) and Millennials (24%) are tapping into savings to cover essentials, but 16% of Gen Z and 18% of Millennial respondents are relying on credit to do so. 
  • Millennials are holding off on making big purchases the most. About 34% are postponing buying a car and 27% are waiting to buy a home. And 38% are postponing major vacation plans. 
  • Gen X and Millennials (43% each) are also pausing saving for long-term goals overall.

Groceries bring the biggest sticker shock

Although people have been living with rising prices for several years, they’re still experiencing “sticker shock” when making certain purchases, and the steep hike in grocery costs is the most alarming to shoppers (77%). 

“There has been a lot of talk with friends and on social media about just how expensive food has become,” said Sokunbi. And while restaurant and takeout prices have increased over the past few years, Sokunbi says it’s the essential grocery items that many people are struggling to afford.

Other price increases that have surprised US adults the most include gas, dining out, utilities and clothing.

Higher prices are driving cutbacks on nonessential spending

Inflation is impacting nearly six out of seven US adults’ (84%) household budgets and overall finances. The survey also found that more than half of US adults (53%) have cut back on nonessential purchases due to inflated prices of everyday essentials. Additionally, 41% say inflation’s impact on bills and expenses has also made it harder to stick to a budget.

Sokunbi noted that people are more cautious about spending their money because of the uncertainty of what’s next for the economy, especially during an election year.

Inflation is delaying long-term goals and debt repayment 

Inflation is also stalling long-term goals and preventing Americans from paying off debt. 

One in three (33%) of US adults surveyed report that the cost of everyday expenses is eating away at their income, so they’re saving less for long-term goals including retirement. Here’s a closer look. 

Furthermore, US adults are relying on borrowing to make ends meet. While 20% of survey respondents are using savings to cover essential purchases that are now unaffordable, 16% are relying on credit options, such as BNPL plans, personal loans and credit cards. And the credit cards aren’t being paid in full. Some have even tapped into their 401(k) accounts to cover major expenses (8%) and 3% have taken out a home equity loan or HELOC. 

For many, taking on new debt is unavoidable to survive. People aren’t just taking on debt because they’re irresponsible or not good with money, Sokunbi said. If you suffer a job loss, income reduction, unexpected medical bill or an expensive car repair, you may not have savings available. “It could be someone who is just beginning their financial journey and they lose their job, or inflation is so high and impacting their income that they can’t afford to follow the debt pay-down plan they had made.” 

Even though overall credit card debt dipped slightly in the first quarter of the year (down to $1.12 trillion from $1.13 trillion in Q4 of 2023), it’s still at a record high. And with the Fed holding interest rates high, the high cost of borrowing can make it even harder to dig yourself out of debt.

How to stay afloat as prices and interest rates remain high

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It’s difficult to afford everyday purchases and pay down debt when neither inflation nor credit card APRs are letting up. The key, according to Sokunbi, is prioritizing your money goals and getting creative with how you’re spending.

Creating a budget to help you balance your expenses and goals can help, even in inflationary times. Kelly Ernst, a CNET Money editor, says you need to know exactly where your money’s going so you can meet your day-to-day needs and stay on track with your long-term goals.

“Budgeting apps like Rocket Money, YNAB and PocketGuard can make it easier to monitor how much you’re spending and adjust your categories as needed.”

These apps can import daily transactions from your bank account so you can see in real time how much you’re spending and make adjustments as needed, Ernst said. For instance, if you see your gas costs have gone up $50 per month, you can review your other spending categories to determine where you could make up this difference, she added.

If the sticker shock at the grocery store is hitting your budget the hardest, you may save money by opting for store-brand products, enrolling in store loyalty programs, searching for coupons for products you already buy and using credit cards to earn a little extra cash back.

Evan Zimmer, an editor for CNET Money, uses his Blue Cash Preferred® Card from American Express to earn 6% cash back at U.S. supermarkets on up to $6,000 per year in purchases (then 1%) at the grocery store. Cash back is received in the form of Reward Dollars that can be redeemed as a statement credit. But don’t turn to this measure if you think charging your purchase will tempt you to overspend.

You may also shop your pantry before you go grocery shopping to see if you can get creative with your meal planning. And you can still go out to eat, but consider saving money with happy hour discounts or by going to restaurants where kids eat for free on certain days. 

Sometimes taking on debt is unavoidable to cover essential expenses like rent, food, transportation costs and childcare. But what you can do is choose the right type of debt. For instance, Sokunbi says many people turn to BNPL plans because they seem like a no-cost way to split up your bill over time. But most people don’t realize they can also come with fees and interest if you don’t pay them off on time.

If you have to temporarily lean on credit cards or other debt to afford essentials, Sokunbi still recommends creating a budget. Use this budget to try to minimize the amount of new debt you take on, and do your best to stick to your budget. Make sure you also build a realistic debt repayment plan when your income and expenses get back on track. 

“Maybe you’re using debt to buy groceries or other essentials in your household,” said Sokunbi. “Just because you’re using debt does not mean you cannot budget, right?” 

If you need more time to pay for a big purchase, you might consider a 0% introductory APR card with a long repayment period to help you avoid interest. If you already have debt, a balance transfer offer or debt consolidation loan might help you better afford your monthly bill without worrying about high credit card APRs continuing to rack up new debt.

Even if you can’t set aside much each paycheck for retirement and savings, continue to make small contributions if you can. Between interest and additional deposits, this money will add up over time. And if your employer matches your contributions, it’s still a chance to earn money. In the meantime, adding your emergency savings can help you be prepared for the unexpected. Even transferring small amounts to your savings account every paycheck can add up. 

Methodology: All figures, unless otherwise stated are from YouGov Plc. Total sample size was 2,392 US Adults aged 18 and above. Fieldwork was undertaken between May 6 and May 8, 2024. The survey was carried out online. The figures have been weighted and are representative of all US adults 18 and over, respectively.



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