Last Updated: September 13, 2022
Inflation Frustration: Nine in 10 Americans are Still Slashing Household Spending
56 percent of Americans are more concerned about their finances now than six months ago, and nearly half are searching for ways to increase their income.
Led by soaring food and fuel costs, the United States’ year-over-year inflation rate hit 9.1 percent in the summer of 2022 – its highest level in 40 years. Several factors have driven this price spike, all resulting in one unfortunate result: less buying power for every American trying to make ends meet.
As a consumer advocate dedicated to maximizing value, Savings.com wanted to know how shoppers have handled the crunch. We studied 1,000 adults and found that the inflation crisis is forcing many Americans to significantly adjust how they shop, work, and save money.
Key Findings
- About one in three Americans are very or extremely concerned about their current financial situation, and 56 percent say they’re more concerned today than six months ago.
- Some people have to take risky measures to make ends meet as inflation increases. One in four said they had reduced savings or 401(k) contributions, and 18 percent have delayed medical care.
- As prices climb, nearly one in two people have tried to increase their household income. Around 20 percent have taken on side gigs, and 22 percent have sold off their possessions to bring in more cash.
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Inflated Concerns: Financial Worries Rise and Mental Health Suffers
Though America rebounded from 2020’s COVID-19 recession with rapid economic growth in 2021, rising inflation has devoured wage increases and dragged down consumer confidence.
Despite strong economic indicators, 90 percent of adults were worried about their current financial situation, with one in three feeling “very" or “extremely" concerned.
How concerned are you about your current financial situation? Extremely concerned 13% Very concerned 19% Somewhat concerned 28% Slightly concerned 30% Not at all concerned 10% Though people of all income levels expressed worries, concerns were most acute among those in lower income brackets. People earning less than $50,000 per year were three times more likely to be very or extremely concerned about their situation than those making $100,000 or more.
Americans are not only currently worried about finances but growing increasingly anxious over time. More than half of adults are more concerned today than six months ago, while only seven percent feel less troubled. All that worrying has left a mark on the nation's mental health.
Personal Budget Cuts: Pinching Pennies to Stretch Dollars
When inflation drives up costs, there are two ways to fight back: spend less or earn more. We found that consumers are currently doing both.
In response to inflation, 95 percent of adults have attempted to reduce spending in 2022, with 90 percent cutting costs across multiple spending categories. Dining out is the most common casualty, dealing a blow to recovering restaurants.
Note: Multiple responses allowedIn what areas have you tried to reduce spending in 2022? Dining out 72% Groceries 59% Gas 53% Entertainment/hobbies 49% Clothing 45% Vacations/travel 37% Streaming services 32% Alcohol 29% Utilities (water, electric) 29% Cable 15% Cell phone 13% Gym memberships 11% Internet 10% Healthcare 10% Women seemed to be more frugal than men in nearly every category, especially when it came to grocery and clothing expenses. The only expenditure men reduced more regularly was alcohol. Men typically consume 3X more alcohol by volume than women, so they may have had more to give up in the first place.
Younger Americans were more likely than their elders to cut in-home entertainment, and older adults were most likely to eliminate vacations and travel – perhaps reflecting the wanderlust of youth. Baby Boomers were also more likely to reduce their utility costs than younger generations.
The most frequently slashed categories (eating out, new clothes, travel, entertainment) were largely amenities, with gas and groceries the notable exceptions. Though essential, food and fuel have seen the highest price hikes, necessitating a thriftier approach.
>>Learn More: Use Our Inflation Calculator
Other Ways People are Fighting Inflation
Whether they’ve limited fuel consumption, cut out luxuries, or skipped doctor appointments, 93 percent of adults have taken steps to reduce household expenses this year. Some savings methods are common sense, while others appear more extreme. Desperate times sometimes call for desperate measures – like some of those included in our research.
Note: Multiple responses allowedHow have you limited household expenses in 2022? Combined errands into fewer trips 48% Reduced use of utilities 46% Do-it-yourself repairs 34% Cancel streaming subscriptions 33% Delayed or canceled vacation 27% Reduced or paused savings or 401(k) contributions 25% Bought second-hand clothing 23% Made only minimum credit card payments 21% Delayed medical care 18% Renegotiated cable or internet fees 13% Got a more fuel-efficient vehicle 11% Canceled cable or satellite service 11% Changed cell phone plan 9% Moved to a cheaper area or home 5% Many of the ways people tried to save money were wise ideas. Around 46 percent of people in our study said they’d made attempts to use fewer utilities. Reducing gas, electricity, or water usage can help save money while doing the planet some good. Another 33 percent canceled streaming services like Netflix, and 11 percent canceled their cable or satellite TV service. Canceling or reducing cable services can quickly add cash to monthly bottom lines – especially considering the money wasted on unwatched TV.
Some cost-saving strategies were less prudent and could create more money problems. For example, about one in five people said they’d been paying only the minimum on their credit cards in 2022. While this may increase spending in the short term, it also accumulates interest and perpetuates debt that can negatively affect one's quality of life.
Nearly one in five people had put off medical care to save money this year. Postponing medical treatment can lead to graver complications if a condition is undiagnosed or untreated. One in four people reduced their savings contributions to help make ends meet. This may seem harmless in the short term, but coming up short for retirement or a rainy day creates trouble down the road.
>> Additional resources: Emergency Savings Calculator
Increasing Income: Buy Less Bacon, Bring More Home
In addition to changing their habits to help combat inflation, Americans are exploring numerous avenues to supplement their salaries. Nearly half of adults have already increased or diversified their income this year, and another third are “definitely considering" their options.
The most common strategies for increasing income include finding new or additional jobs or selling off personal possessions. Within these categories lie an array of alternatives – some more appealing than others. Below are the leading methods respondents have already used – or are seriously considering – to increase their income this year:
Note: Multiple responses allowedWhich ways to increase household income have you done or are seriously considering in 2022? Percentage who’d definitely consider this Percentage who have done this Sell unused items 33% 22% Start a side job (Uber, Doordash, etc.) 20% 15% Take a second part-time job 22% 6% Change jobs 22% 5% Start my own business 17% 8% Sell my blood plasma 13% 3% Ask for financial support from family and friends 8% 8% Pawning items 10% 3% Get a personal loan 6% 7% Get a renter or roommate 4% 3% Refinance mortgage or get a second mortgage 4% 2% Take money from 401(k) account 3% 2% Before attempting any of these money-generating tactics yourself, it's wise to consider the long-term effects of short-term solutions.
About 22 percent of people had sold their unused items to generate money. Pawning prized possessions to get through a rough spell can leave a world of regrets. It’s important to be selective in what you sell off. Another 13 percent said they had recently taken out a personal or payday loan. Borrowing money can help you meet immediate needs, but it can also leave you in a sticky cycle of debt – especially with high-interest payday loans.
Remember that pursuing more income should improve quality of life and address pressing demands, not create new problems or future challenges.
>> See more: Net Worth Calculator
Inflation Outlook
The nation faces an inflation situation unseen for more than a generation. The Federal Reserve Board recently raised interest rates to combat rising prices, but no end to the crisis is in sight. Such economic countermeasures also threaten employment growth and could trigger an upcoming recession.
In the meantime, Americans (especially women) are worried about money, suffering mental health woes, and seeking ways to shore up their finances. Nearly all adults are reducing budgets and cutting specific outlays for food and other household expenses. Many are seeking additional income.
Related: Rule of 72 Investment Calculator
Savings.com understands the current challenge and will continue to help readers save money while counseling wiser choices for tightening the belt. Our research results show these are some of the most prudent and popular financial tips for surviving the inflation spike.
- Taking advantage of sales, comparison shopping, and using coupons always makes sense.
- Fuel and energy efficiency are sage choices that everyone should consider.
- Surrendering amenities and making temporary sacrifices are painless ways to patch short-term deficits.
- Selling off excess items and streamlining budgets by ditching unnecessary services can quickly declutter life and expenses.
- Taking an additional job or starting a business can pad bottom lines but shouldn’t demand overcommitment or put startup investment at risk.
Any major lifestyle or budgetary change should keep balance in mind – quick fixes today can mean more trouble tomorrow. Always think twice before tapping into future funds or suspending good saving practices. Don’t borrow money that might cause entanglement in a perpetual web of debt. And, when possible, don’t delay important medical treatment.
Be smart, be safe, be frugal – and may the rest of the decade be better.
Our Data
In June 2022, Savings.com conducted an online survey in English of 1,002 American adults ranging from 18 to 84 years old, with a mean age of 45. Respondents' genders, ages, and ethnicities accurately represented the nation's population based on the most recent census figures. Participants’ average household size was 2.5 persons. Income levels were as follows: 16 percent earned less than $25,000 a year, 25 percent earned between $25,000 and $49,999, 20 percent earned between $50,000 and $74,999, 15 percent earned between $75,000 and $99,999, and 21 percent earned $100,000 or more each year. Two percent of respondents declined to report income.