Yahoo Finance Here Are Americans’ Top 4 Unexpected Expenses of the Year, According to Survey
Navigating a budget can be challenging, but understanding where your money is going is an important starting point.
Read: 5 Dollar Tree Items That Are Worth Buying Now
Learn: How To Get Cash Back on Your Everyday Purchases
To help keep up with Americans’ spending habits, a recent GOBankingRates survey asked respondents about their most significant unexpected expenses and how they impact their wallets. The survey showed that four areas played the most prominent role in households’ budgets this year: food, gas, housing and utilities.
Within this article, we will dig into each of these expenses and explore what’s caused the drastic price increase for some.
Americans’ Top 4 Unexpected Expenses of the Year
Our survey found that food was the most significant unexpected expense for 34% of Americans, followed by gas (26%), housing (12%) and utilities (11%).
There are a variety of factors influencing these increased expenses. Learning why these items have gone up in price may help Americans understand these costs better, and thus, appropriately budget for them.
Food
Food is an unavoidable expense for every person since we all need to eat. However, food costs have increased dramatically in recent years, primarily due to inflation.
“Food costs have surged due to many factors, including supply chain disruptions, extreme weather events affecting agriculture and increased transportation costs,” said Eric Sornoso, CEO of Mealfan.
“Additionally, changing consumer behaviors, such as higher demand for certain products during the pandemic, have contributed to price hikes. This strains household budgets as families spend more on groceries, dining out less frequently, and potentially altering dietary habits.”
It’s not just the increase in food prices causing the issues; the cost to transport groceries and labor costs throughout the supply chain have also increased.
Supply chain disruptions have also been blamed for the rising cost of food. The COVID-19 pandemic caused global supply chain issues, some of which are still present today — things like labor shortages, shipping delays and disruptions in manufacturing. Supply chain disruptions cost money, which means these added costs are passed onto consumers in the way of more expensive food at grocery stores and restaurants.
Transportation costs are also linked to increasing food prices because food needs to be transported as part of the supply chain process. Increased gas prices and labor shortages have contributed to rising transportation costs for delivering food to where it needs to go.
Check Out: 10 Cheap Aldi Brand Products Better Than the Name Brands
Gas
Americans who drive a lot may have noticed that they are spending more at the gas pump recently. The increased gas prices have led to higher spending, especially for those regularly driving far for work, family or travel
Global oil prices have increased due to geopolitical tensions, supply disruptions and global economic conditions.
Housing
The housing market constantly fluctuates, but recently, housing costs have been increasing at a faster pace.
“One of the main factors driving up housing expenses is the imbalance between supply and demand,” said Joshua Martin, Founder of Atticus Home Buyers.
“There’s a high demand for housing, but the supply is limited, especially in desirable areas. This scarcity drives up prices, making it harder for average Americans to afford homes.”
In previous years, record low interest rates made purchasing a home attractive and more affordable for many. However, over the past 12-18 months, mortgage rates have risen substantially, and home prices have not seen any reprieve.
Now, the biggest issue that most homeowners face is that increased home prices are causing higher property tax bills, making it much more costly to own a home.
“The icing on the cake is that wages have not kept pace with the rising cost of housing, making it even more difficult for individuals and families to find homes that fit within their budget,” said Martin.
“This creates a situation where housing expenses take up a significant portion of people’s income, leaving less room for other essential expenses.”
Utilities
Utilities like water, electricity and heating have also become more expensive for Americans. This is due to several factors, but the most notable is that some utility providers are introducing peak demand pricing.
Peak demand pricing is when the utility provider charges higher rates during higher energy consumption periods, like at certain hours of the day. This can lead to more expensive utility bills, especially for those who can’t quickly shift their usage to off-peak hours.
In addition, extreme weather events caused by climate change have increased demand for heating and cooling. Excessive temperatures require more energy to maintain comfortable living conditions, leading to higher utility bills.
Also, much of America’s utility infrastructure is aging and needs repairs and updates. The cost of maintaining and updating these systems can be passed on to consumers through higher utility bills.
How To Save More
If these unexpected expenses have caused issues with your budget, it may be time to look for ways to save money.
You could shop at cheaper grocery stores or buy off-brand food items. You could drive less or carpool with others and split the cost of gas. You could move to a cheaper apartment or rent out a spare room in your house. And you could turn down the heat in the winter and air conditioner in the summer.
Other areas to consider cutting back include dining out, entertainment, travel and clothing. Try spending less on one or several of these categories if unexpected expenses have caused economic hardship for you.
The Bottom Line
The rising costs of food, gas, housing and utilities have made sticking to a budget difficult for many Americans.
If you need to stretch your budget to uncomfortable levels, you may need to consider finding ways to save money on these expenses, cut out other unnecessary spending or bring in extra income.
More From GOBankingRates
This article originally appeared on GOBankingRates.com: Here Are Americans’ Top 4 Unexpected Expenses of the Year, According to Survey
