Yahoo Finance Here’s How Much Americans Are Spending on Monthly Bills
People are spending no small amount on their monthly bills. According to a recent survey by GOBankingRates of over 1,000 adults, 30% of Americans are paying $201 – $300 of their monthly budget on utility bills like electric, heat/gas, and water. Aside from this, 19% are spending between $301 – $500 on car payments alone.
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That’s no small chunk of change–and prices only continue to rise. In fact, one poll from The Associated Press-NORC Center for Public Affairs Research, shows that about 2 in 3 Americans say their household expenses have risen over the last year, but only about 1 in 4 say their income has increased in the same period.
“A combination of macroeconomic and consumer behavior factors is responsible for the recent spike in monthly bills, especially concerning utilities and car payments,” said Andy Chang, founder and CEO of The Credit Review.
Read on to learn why consumers are spending so much and what they can do to save more.
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Inflation and Stagnant Wages Are Contributing
One of the biggest reasons utilities like electricity and water cost more now is because of rate hikes across the country. Per the survey, Gen Z and Millennials are in the highest category of those paying up to $301 – $400 a month for these services.
“With the cost of raw materials, transportation, and other expenses on the rise due to inflation, utility companies have passed some of their increased costs on to customers,” said Jake Hill, a finance expert and the CEO of DebtHammer.
Other experts agree.
“People are spending so much on their monthly bills because the cost of virtually everything has increased pretty significantly over the past few years,” said Carter Seuthe, CEO of Credit Summit Debt Consolidation.
“Combine that with salaries not increasing at the same rate–or at all–and you have tons of people who now have to contribute a larger percentage of their paycheck directly toward their monthly bills.”
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More People Are Working From Home Post-Pandemic
According to Forbes, as of 2023, 12.7% of full-time employees work from home, while 28.2% work a hybrid model.
“Stay-at-home orders and remote working trends triggered by the pandemic have led to households consuming more electricity, heat and water than usual,” said Adam Garcia, a finance and investing expert as well as the owner of TheStockDork.
“Home has become the office, and with more activities shifted indoors including leisure and schooling, the resultant surge in demand naturally leads to larger utility bills.”
Failing To Do an Energy Audit Can Cost You Big
One of the most common reasons for costly bills is lack of marketing knowledge, said Caio Bersot, content manager at EnergyRates.
“When you don’t know your options, rights, duties and general rules, you don’t know what you’re paying for,” he highlighted.
“Going through your bill details may not be the most fun thing,” he explained, “but people need to know what goes into their bills so they can recognize when there is something wrong.”
With energy, for example, he says you can choose your provider in many North American regions. Even people in fully regulated areas can often choose the type of plan for their house.
“Folks are spending too much money on energy bills because they don’t take the simple step of getting an energy audit conducted on their home from their provider,” said David Bakke, finance expert at DollarSanity. “It’s free and they give you a list of ways to save.”
Everyday Habits and Lifestyle Impact Consumer Bills
Bersot equally notes that there is also a big lack of understanding of the factors behind bills, especially for utilities like natural gas and electricity.
“This goes from macro events, like extreme weather, to specific issues, like poor house insulation.”
He says both issues can be deal breakers for your gas and power costs.
“Considering that around 70% of residential energy costs are associated with heating and/or cooling,” he continued. “Consumers often don’t understand how their everyday habits and lifestyle affect their bills beyond the lights-on-and-off topic.”
According to Bakke, people spend too much money on water because they don’t take advantage of simple tips.
“Take shorter showers, and only run full loads of dishes and clothes. There are other strategies but those are the biggest money savers.”
Not Investing in Energy-Saving Appliances and Lighting
As a society, there’s a trend towards higher consumption, said Chang.
“With more electronic devices in our homes, the electricity consumption has surged.”
According to Hill, there are other contributing factors that influence high utility bills.
For example, if your home’s appliances aren’t energy-efficient, he says you’re needlessly using more electricity than you would if you upgraded them.
“The one-time expense of updating your appliances quickly pays for itself in the form of lowered energy bills.”
Experts also note that updating your light bulbs can save you big each month.
Nowadays, there are several options available when purchasing a light bulb, including compact fluorescent lamps (CFLs), halogen, incandescent and light-emitting diode (LED) bulbs. These lights all have varying levels of energy consumption.
When you’re in the market for a lightbulb, experts recommend opting for ENERGY STAR-certified LED lighting. These energy-efficient bulbs can reduce your electricity costs since they have undergone extensive testing and meet stringent conservation standards.
Seasonal Fluctuations Lead to Periodic Spikes
“It’s understandable why many consumers are struggling with swelling monthly bills,” said Michael Ryan, finance expert and owner of Michael Ryan Money. “Both utility and automotive costs have been sharply rising, putting strain on household budgets.”
He says utility expenses like electricity, heating, and water have spiked recently for several key reasons.
“First, infrastructure maintenance and grid modernization gets passed onto customers through rate increases,” he explained. “Also, seasonal fluctuations lead to periodic spikes–air conditioning usage in summer and heating demands in winter prompt higher energy usage and invoices.
He also noted that extreme weather events also impact supply and transmission, again increasing what consumers pay.
Car Prices Have Surged
The survey also revealed that among those paying $301 – $500 on monthly car payments, Millennials rank the highest of those dishing out hefty fees.
“Car loan payments have grown due to surging vehicle prices, massive interest hikes and a preference for more high-tech models with higher price tags,” said Ryan.
He says lengthier auto loans allow lower monthly payments but increase total interest owed over time.
“To ease these mounting budget pressures, I advise focusing on needs over wants when vehicle shopping and negotiating the final price, not just the monthly payment.”
Garcia also also observes that vehicle costs are equally burdensome for many consumers.
“Several factors play into these costs — the type and age of the vehicle, monthly loan payments, interest rates, insurance, maintenance costs, fuel costs, among others.”
Additionally, he says that the sales price of new and used cars has been trending upwards, leading to higher financing needs and thus bigger monthly payments.
“Lower rates of car ownership could indeed alleviate this situation, but for many, vehicles are a necessity, either because public transportation isn’t a viable option or due to the demands of their personal or professional lives.”
Fight Off Hefty Car Payments By Being Strategic
The survey also highlighted that younger generations like Gen Z and Millennials are those paying most in the $501 to $1000 monthly categories.
But according to data from the credit reporting agency TransUnion, they also have greater auto loan delinquency rates that are significantly higher than their pre pandemic levels.
“Auto loan interest rates have risen quite a bit over the last few years, and they are still on the rise. So, for those who have bought a car recently, they are likely looking at larger monthly car bills,” said Ben Michael, the director of auto at Michael & Associates.
To offset these high-costs, experts recommend being strategic.
With interest rates also sky-high, Michael says one of the best tools you can use to get the best deal on your car these days, both from a buyer’s perspective and a seller’s, is to maximize your cash offer.
“Either buying outright with cash or putting down a hefty down payment. This will save your dealership the hassle of financing a vehicle and waiting on payments, and it will get you the best deal possible since you’ll avoid steep interest payments,” Michael noted.
“Even if you need to take out a loan for this to work, consider going to your bank for a personal loan or to see if they’ll approve you for a car loan.”
He adds that this can either be a powerful bargaining chip when negotiating for dealer financing, or a chance to make an all-cash offer at the dealership, and probably get a nice discount in the process.
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This article originally appeared on GOBankingRates.com: Here’s How Much Americans Are Spending on Monthly Bills
