It’s no secret that inflation and rising interest rates over the past year-plus have impacted many consumers’ financial stability.
A recent WSFS Bank Money Trends study found that nearly four in 10 regional residents (38%) are spending more money now compared to last year, while only 21% in the region are saving more. The study surveyed 1,043 Greater Philadelphia and Delaware region consumers, measuring spending and saving trends and the impact of economic conditions among adults ages 18-55.
Rising costs and inflation topped the list of why consumers are spending more (72%), followed by paying for emergency expenses such as car repairs or medical bills (27%), paying off more debt (23%) and rising interest rates on credit cards and loans (23%).
Here are some tips to help adjust your financial habits to withstand economic headwinds.
Dealing With Inflation and Rising Rates
Inflation and rising interest rates continue to have a major impact on regional consumers, with 72% spending more this year attributing it in part to rising costs and inflation.
When looking at spending categories, rising costs for essentials have left consumers’ wallets stretched thinner, with 60% spending more on groceries, with transportation (53%), utilities (50%) and housing (43%) also affecting them more than last year.
While continued economic headwinds have impacted many consumers, there are adjustments you can make to help your money stretch further. Some consumers are already adjusting as they’ve reduced spending on restaurant visits (42%), entertainment (34%), and travel and vacations (34%) from last year, according to the study.
Prices for essentials like groceries may have increased, but you can still search for savings by looking for discounts, taking advantage of coupons and rewards programs, and eating at home.
Regularly review your budget and finances to help identify areas where you can cut back, like unused subscription services. If you haven’t revisited your monthly bills like cable, internet and mobile devices lately, consider contacting your providers to negotiate a lower price or switching to a more cost-effective alternative.
Opportunities to Grow Savings
Rising interest rates have certainly made it more difficult to save, but the good news is it creates the opportunity to earn more on your savings through certificates of deposit (CDs), money markets and high-yield money markets than there has been in quite some time.
Half of respondents (50%) have heard of but never used savings tools like certificates of deposit, while 51% said the same about high-yield money market accounts, signaling an opportunity for consumers to use higher interest rates more to their advantage. These savings vehicles tend to offer a higher interest rate than standard savings accounts and provide a safe way to earn interest that can really add up in this challenging economy.
Of those saving more this year, 40% cited having specific savings goals as the reason why, and goal setting can be a great way to keep yourself on track financially.
If you feel you need more assistance, schedule an appointment with your local banker, who can help you map out your goals and how you will achieve them.
Helping you boost your financial intelligence.
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