Fuel Prices Affecting Family Budgets
Families are facing many economic issues such as job losses, housing issues and stock market drops that impact retirement accounts. When high gas prices are added to the mix, people are striving to create household budgets that allow enough money to cover all the household bills. The specific cuts are different for each family; however, the cuts can substantially change lifestyles.
Other People Are Reading
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Cutting Back
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For many people who must travel to work, drop off children at daycare and perform tasks like grocery shopping, the household budget must shift somewhere to accommodate the additional fuel costs. Cutting the fuel budget may be very difficult, so cuts have to be made in other areas. Groceries are a good example of where people can cut corners, although it is not always a good solution. Foods that are organic or more natural often cost more than heavily processed, bulk-produced food. Families that must reduce the overall budget buy fewer wholesome foods, which can have long-term health effects. For example, a person may begin buying white bread when she had typically purchased a multi-grain bread.
Suburban Life
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People seeking less crowded, more urban areas often live outside a larger city and commute to work. According to Bloomberg, suburban towns grew approximately 15 percent from 2000 to 2006. As housing values have decreased, the expense to travel into the city to work has increased due to higher fuel prices. Families have the added burden of not being able to easily sell a home for its equity value to relocate for a cheaper commute.
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Regular Activities
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Many regular events that people participate in are being re-evaluated. For example, a family may have found a church they enjoy attending but it is 10 to 15 miles away or further. People frequently must make tough decisions about activities that were part of normal life before fuel prices rose to current levels. Instead of driving to a park or other facility for physical activity, a person may choose to stay home and watch television to save a few dollars in fuel.
General Spending
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Clothes, personal products, medication and all the consumer goods families use are also looked at when tightening the budget to absorb higher fuel costs. According to USC Marshall, for each cent that gas prices increase, spending declines by $1 billion in other consumer spending areas. This means that families are cutting spending to pay for fuel. Reviewing finances and reducing spending is not bad, as it opens up the opportunity to re-evaluate family dynamics and goals. However, when budget issues are created by higher fuel costs, it makes family financial plans, such as saving for retirement, planning education costs and replacing aging cars, more of a challenge.
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References
- Photo Credit Refuelling by gasoline of the modern car image by terex from Fotolia.com
