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Many Americans aren’t feeling optimistic about their money next year.
Fully 26% believe their financial situation will get worse in 2022 and 42% believe it will stay about the same, a survey from Bankrate found. The financial website, through YouGov Plc, polled 2,450 adults Nov. 29-Dec. 1.
Respondents lay the blame mostly on inflation: 70% of those who expect a worsening of their finances cite inflation as the biggest barrier to better money circumstances, and 44% of those who believe their financial situation will stay the same agreed.
Inflation is essentially the rate of price increases over time. In November, consumer prices jumped 6.8% from 12 months ago, the fastest pace since 1982, according to the Labor Department.
That means Americans are digging deeper into their wallets for everything from food to shelter to gasoline. Since last November, gas prices skyrocketed 58%, used cars and trucks spiked 31% and new vehicles are up 11%. Food prices are up 6% from 12 months ago and the cost of shelter increased 3.8% on the year.
“For those that are living paycheck to paycheck or where budgets are already tight, inflation puts a further squeeze on the budget,” said Greg McBride, chief financial analyst at Bankrate.
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“For those that are trying to pay down debt or catch up on savings, it is very much an obstacle to progress.”
The Federal Reserve announced last week it will take moves to combat inflation. It’s going to accelerate the reduction of its monthly bond purchases and then will start raising interest rates, which is expected to begin in late winter or early spring. The central bank typically raises interest rates to slow the economy and bring inflation down.
In the meantime, McBride suggests tracking your spending and looking for opportunities to take advantage of sales, coupons and various discounts and loyalty programs.
“It can be redeeming your cash-back credit-card rewards as a way to defray out-of-pocket expenses,” he said.
