I post a question on social media every year asking, “Which bill do you hate paying the most?” In my Steve Harvey voice, the number one answer is, “ALL OF THEM.”
Bills, bills, bills! We can’t avoid them. Certain bills like groceries, housing, utilities and transportation are a necessity. These bills keep rising. Add to that, modern technology and modern advancements continue to add more and more bills to the list. Internet and streaming services are bills that aren’t considered a necessity but are considered must-haves. Nowadays, people are paying for cable, Internet and streaming services. FREE local radio stations are becoming extinct. Nowadays, people are tuning into satellite radio. Satellite radio comes with a monthly fee.
The answer to my question, are bills stressing you out, is an emphatic yes for most people. What surprised me the most is what bill is stressing out Americans the most.
USA Today recently did a comprehensive survey to ascertain what bills were stressing out people the most. Surprisingly, paying for groceries was the number one stressor. Now that’s what I consider, “food for thought!”
In this article, I’m going to delve into some of the findings in the USA Today article, titled “Study: Over two-thirds of Americans are stressed by everyday expenses—these are the most frustrating ones.”
Managing personal finances can be a significant source of stress, and for many Americans, certain expenses are particularly burdensome. A recent survey highlights the top financial stressors that Americans face, shedding light on the challenges of balancing household budgets in today’s economic climate.
Groceries: The Leading Stressor
Groceries have emerged as the most frustrating expense for Americans. The rising cost of food due to inflation has put a strain on household budgets. According to the survey, 60 percent of Americans cited groceries as their primary financial concern. I was surprised that this is the biggest bill stressor for Americans. After some reflection, I realized that this is the only expense my wife and I go back and forth over every month. I complain that she’s spending too much on groceries. She snaps back, “groceries are expensive. Perhaps you should do the shopping.” I shut up until next month, then complain again. The cycle continues. The essential nature of food and the frequent purchases required to maintain a household has proven to be a major stressor.
The pandemic made this issue worse, with disruptions in the supply chain leading to higher prices and limited availability of certain products. As a result, families have had to adjust their shopping habits, often opting for cheaper, less nutritious options to make ends meet. This shift not only impacts finances, but also health and well-being.
Housing Costs: A Close Second
Following groceries, housing costs are the next significant financial stressor. About 45 percent of respondents reported that rent and mortgage payments are major sources of financial anxiety. The housing market has been particularly volatile, with prices soaring in many areas due to increased demand and limited supply.
For renters, the situation is equally challenging. Many have faced rent hikes, while others struggle to make payments due to stagnant wages and job insecurity. Homeowners, on the other hand, are burdened with high property taxes and maintenance costs, adding to their financial woes.
Transportation: The Cost of Getting Around
Transportation expenses, including car payments, fuel, and maintenance, were cited by 35 percent of respondents as a significant source of stress. The cost of owning and operating a vehicle has increased, driven by higher fuel prices and rising vehicle maintenance costs.
Public transportation users aren’t immune to these financial pressures, either. Many cities have seen fare increases and reduced services, forcing commuters to find alternative, often more expensive, ways to get around.
The Impact of Inflation
Inflation has played a central role in escalating these expenses. The cost of living has risen steadily, outpacing wage growth and eroding purchasing power. This economic pressure is felt across various aspects of daily life, from utility bills to healthcare costs, further straining household budgets.
Demographic Variations in Financial Stress
The survey also highlighted how financial stress varies among different demographic groups. Younger generations, such as Millennials and Gen Z, reported higher levels of financial anxiety compared to older generations. This can be attributed to factors such as student loan debt, lower starting salaries, and higher costs of living in urban areas where many young professionals reside.
Income level also plays a significant role in financial stress. Lower-income households are disproportionately affected by rising costs, with a higher percentage reporting difficulties in managing their expenses. Geographic variations were noted as well, with residents in certain states experiencing higher living costs and, consequently, more financial stress.
Strategies for Managing Financial Stress
While the financial landscape may seem daunting, there are strategies that individuals and families can employ to manage their expenses more effectively:
Budgeting: Creating and sticking to a budget can help track spending and identify areas where cuts can be made.
Emergency Savings: Building an emergency fund can provide a financial cushion in times of unexpected expenses.
Seeking Professional Advice: Financial advisors such as myself can offer guidance on managing debt, investing, and planning for the future.
Utilizing Assistance Programs: There are numerous government and non-profit programs designed to help low-income families with housing, food and healthcare costs.
The USA Today article referenced a report from the Bureau of Labor Statistics regarding the top three annual spending categories for Americans. They are housing (33.3 percent), transportation (16.8 percent) and food (12.8 percent). Together, they represent 63 percent of a typical person’s income. It’s actually worse than that. Have you ever heard a weather forecaster say, “It’s 90 degrees outside but it feels like 100 degrees?” That’s the picture I’m painting here. Those figures represent 63 percent of a typical person’s income, but it feels like 75 percent of a person’s income. Here’s why. These published reports use gross income or income before taxes and other payroll deductions. Truth is, you can’t budget off of gross pay. You have to budget off of net pay or the actual amount of money deposited into your bank account.
When working with clients, I teach a concept I call “Budget Sculpting.” This is a process where I recommend spending limits in various categories. I use net income, the money you receive in your paycheck when detailing these recommendations. For housing, my recommendation is 30 percent of net pay. For transportation, my recommendation is 12 percent of net pay. For food, my recommendation is 10 percent of net pay. This is a more realistic script to follow. It totals 52 percent of your take-home pay. This affords you the opportunity to do other things like save, invest, do fun activities and have a life.
The financial stress experienced by many Americans is a complex issue influenced by various factors, including rising costs of essential goods and services. By understanding the primary sources of this stress and adopting practical strategies to manage expenses, individuals can better navigate their financial challenges. Ultimately, proactive financial planning and seeking available resources can help alleviate some of the burdens and improve overall financial well-being.
(Damon Carr, Money Coach can be reached @ 412-216-1013 or you can visit his website @ www.damonmoneycoach.com)
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