The disenfranchised continue to feel marginalized even about their golden years.
Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…
The interesting study
The financial experts at Bankrate polled 1,000 adults in the U.S. to see how secure the average American consumer is feeling about their financial stability, as well as to ask specific questions related to how they spent the savings we’ve all been enjoying recently as a result of lower gas prices.
The big result
The majority of Americans ramped up their household spending in one way or another using the extra cash flow they have available thanks to recent low gas prices. With prices lower than previous months, families are spending less of their income on transportation costs, leaving more money available for other things.
The fascinating details
Four out of ten Americans (40%) spent their monthly gas savings to help cover regular budgeted expenses. One in seven (14%) used the extra money on discretionary spending – i.e. the nice-to-haves in your budget that you add when you have more money, like a few extra nights eating out or an extra weekend vacation plan this summer.
Almost one in four respondents moved gas savings directly into their overall saving strategy. Of that 23% who saved, 19% put the money directly into a savings account while the other 4% invested it for long-term savings.
Out of those who spent the money, Bankrate provided some additional highlights:
- Parents (49%) were more likely to spend gas savings on necessities than non-parents (37%)
- Low-income earners (those who make less than $30,000 per year) are twice as likely to spend on necessities, whereas those who make over $75,000 per year are more likely to save or invest.
- Some college graduates spent the savings on necessities (31%) but not as often as non-graduates (47%)
- Millennials spent their savings on discretionary expenses the most often (17%) while seniors were the least likely to spend on something nice (7%)
Oddly, even though so many respondents spent their gas savings on necessary expenses that should be covered by a regular household budget, such as groceries, financial security is at its second highest point since 2010.
What you can do
Spending savings that result from an outside influencer like national gas prices on necessary expenses like groceries is a risky proposition. Essentially, it means that you wouldn’t otherwise be able to pay for those expenses if you didn’t receive the windfall in your budget of paying less for gas this past month.
“Spending unexpected savings on necessary expenses often points to an unbalanced budget where you’re forced to pick and choose between things you really need to buy every month,” says Gary Herman, President of Consolidated Credit, “and it can lead to trouble. When gas prices go up again as they inevitably will as we head into summer, it means these families may be left in a behind where their expenses outstrip what they earn in a month.”
So it’s in your best interest to review your household budget to see where you really stand. Your net monthly expenses should always be less than the gross income (take home pay) that you bring in. If not, you’ll be forced to choose between necessities, juggle bills or rely on debt to cover the difference. If you take this last option and use credit cards to cover budget shortfalls, you make the situation worse because your credit card monthly payments increase right along with the balances.
If you’re struggling to achieve budget balance, we can help. Call Consolidated Credit today at or complete our online application to request a free debt and budget evaluation with a certified credit counselor. With the right assistance and a customized solution, you can achieve the balanced budget you need to handle whatever market fluctuations may occur this summer.