NerdWallet: Do you have an extra $1,000 a month? You’re going to need it.

by | Aug 23, 2022 | Stock Market

This article is reprinted by permission from NerdWallet.  Rising prices (i.e., inflation) are everywhere you look — on the news, at the pump and in the grocery store. We notice these changes when we reach for our wallets, but it’s difficult to grasp what an extra dollar here or several dollars there mean over the course of several weeks, months or an entire year.

With prices up 8.5% year over year, household spending — that’s yours and mine — stands to rise by several thousand dollars. Even with the Federal Reserve’s attempts to control inflation through interest rate increases, it’s unlikely these prices will fall dramatically. This climb isn’t just a tank of gas or a few additional dollars at the store. For some people, it could be an entire paycheck every month. Using inflation and annual spending data from the U.S. Bureau of Labor Statistics, we looked at how spending in 2022 will differ from 2020, the last full year when inflation was relatively stable. We chose a handful of categories that many, if not most, Americans spend money on, such as food and electricity. The inflationary impact is remarkable.Household expenditures could rise by $11,500 In all of 2020, American households spent $61,300, on average. This number includes everything we spend our money on: housing, food, entertainment, clothing, transportation and everything else. In 2022, it stands to reach $72,900, a difference of more than $11,500 if consumers want to maintain the same standard of living. Keep in mind, this is an average, a number that represents an approximation a …

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