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Almost as soon as Americans learned to deal with COVID-19, new stress slammed into their lives: inflation worries.
A flood of COVID-19 government incentives, supply chain issues and the war between Ukraine and Russia pushed inflation to levels Americans haven’t seen since the 1970s. In August 2022, the Consumer Price Index reported that, while inflation had slowed down slightly due to lowering gasoline prices, the inflation rate was still 8.5% above July 2021, the most significant 12-month increase since May 1979. For instance, groceries are now 13.5% higher than in July 2021.
Lexington Law Firm surveyed 1,000 people between the ages of 18 and 99 about their views and opinions on the current situation regarding inflation. Here’s a breakdown of some of the results.
1. 79% of Americans are panicked about inflation
The study found that most Americans are distraught about the current situation. Seventy-nine percent said they were panicked about inflation. That 79% breaks down into 40% who said they were “somewhat worried about inflation” and 39% who said they were “very worried.”
The difference can be explained by the two groups’ age and financial situation. The “somewhat worried” group is composed mainly of younger people less concerned about inflation and those who find themselves more financially secure. Those who are “very worried” tend to belong to groups that were less financially secure or have a lower income. While all Americans have been hit hard by inflation, this second group bears a much more significant burden. For instance, inflation hits seniors on a fixed income much harder than many other groups.
For all groups, inflation worries impact important factors like savings accounts, saving for college, making necessary home improvements and caring for elderly parents. Families can only stretch dollars so far when dealing with pressing expenses.
2. 1 in 5 Americans has experienced physical and/or mental health challenges because of inflation stress
Worrying about money can be one of the major stresses in a person’s life. The survey found that 21% of respondents said inflation “hurt my health,” while 20% said they were more “short-tempered,” which can lead to mental strain and problems with friends and family members. A separate survey conducted in March 2022 by the American Psychological Association found that 87% of those surveyed said inflation worries about everyday items like food, gas prices and energy bills created the most stress. Respondents also cited factors like supply chain issues and the war in Ukraine as other sources of stress.
Inflation worries can cause numerous health problems, including:
- Low energy
- Strained relations with a partner
- Loss of sleep
- Difficulties concentrating
- Muscle pains
Some symptoms can dramatically affect a person’s health if they continue over a prolonged period. It’s important to find ways to cope with inflation stresses, such as finding extra income, snowballing credit card payments or refinancing debt.
3. Women are more worried than men about inflation
Our survey also found a gender difference in how men and women respond to inflation. The survey reported that 82.5% of women are worried about inflation, 11.8% more than men. Women expressed higher levels of concern in almost all categories.
Several factors arising from the pandemic may explain this difference. MarketWatch reported that more women left their jobs for pandemic-related reasons than men, and the work situation has not yet returned to pre-pandemic levels. A May 2021 survey by the Kaiser Family Foundation found that concern about caring for children during school closures and unsafe workplaces were frequently mentioned as reasons that women left their jobs.
According to MarketWatch, this has resulted in an imbalance in household duties. Since women are more likely to be the household member who buys groceries, investigates childcare or plans for family events such as birthdays or holidays, they tend to bear the burden of stress more than their male partners.
Even women who remained in the workforce were more likely to be stressed by money and inflation. The survey found that 14.8% of men were more compelled by inflation to approach their employers about a raise, compared to 10.2% of women.
4. Adults 25 – 34 (18.3%) were least likely to rely on their credit cards
Another interesting result of our survey was that adults aged 25 to 34 were less likely to rely on their credit cards to help deal with inflation. One reason for this is that members of Generation Z and millennials often have lower limits on their credit cards, which prevents them from spending large amounts on items like groceries or gas. Meanwhile, credit card reporting company Experian found that members of Generation X, now middle-aged, and baby boomers in their 60s had the highest levels of credit card debt and the most credit cards.
It’s a bad habit to rely on credit cards to pay for increased costs during inflation. With the Federal Reserve rapidly raising interest rates, the cost of borrowing is becoming increasingly expensive. When people carry credit card debt, it increases a little every day.
Hefty credit card debt can lead to severe problems and impact the ability to buy a car, purchase or rent a house or pay for education. As a person’s credit worsens because of overspending on credit cards, it’s harder for them to undertake other critical financial transactions. As hard as it may be, working to reduce credit card debt, even during inflation, is the smartest move.
5. Adults 25 – 34 are the least concerned with inflation
The survey also found that members of Generation Z and millennials are the least concerned with the effects of inflation. One reason for this may be that many young people moved back in with their parents during the pandemic and thus don’t have the same living costs as other age groups. Pew Research found that between February and March 2020, 2.6 million young adults moved back in with a parent.
Meanwhile, the Federal Reserve of Cleveland found that most young adults who moved back in with their families came from high-income groups. Only 10% of those who returned home came from families that earned less than $27,000 a year. Thus, many young adults are protected from the worst ravages of inflation and may be less worried about it. Challenges will arise when they finally leave their parents’ homes to buy their own homes, start a family or pay for basic expenses, and they may be unprepared to deal with the high cost of inflation.
How to protect your finances from inflation
Experts say no one can predict how long inflation will last. Some economists predict inflation may persist until late 2023 or even longer. Recent interest hikes by the Federal Reserve aim to slow down inflation. The downside to these Federal Reserve interest rate increases is that using credit cards to pay for even small things becomes more expensive.
Maintaining good credit and using personal finance tools is a great way to help protect your money against rising credit rates during inflation. Consider working with a credit repair consultant who can help you get your credit where it needs to be.
The trusted attorneys of Lexington Law can help you increase your credit score in several ways. We can assist you with challenges to or disputes with a credit bureau, offer ID theft insurance or provide you with a personal finance management tool to help you with your expenses, to name just a few of our services. You can visit our website to learn more about our services.
Note: This survey was conducted for Lexington Law Firm using Suzy.com. The sample consisted of a total of 1,039 responses per question and is not statistically representative of the general population. This survey was conducted in September 2022.
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