I’m a Financial Expert: 5 Things the Middle Class Should Cut From Their Budgets If Inflation Remains High
Written by
Martin Dasko
Edited by
Levi Leidy
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Although the current inflation rate is lower than it was during the COVID-19 pandemic, prices remain high, and for many middle-class families it’s crucial to look into ways to save money.
GOBankingRates consulted financial experts to determine which five expenses middle-class Americans should cut from their budgets.
Expense 1: Living in More Space Than You Can Afford
Leslie H. Tayne, Esq., a finance and debt expert and the founder of Tayne Law Group, advises you to consider downsizing to reduce your budget amid high inflation. “This could look like moving into a smaller apartment, moving to a new part of town where housing costs are cheaper,” she explained. Since housing is a significant expense for most, it’s crucial to find ways to reduce it to manage rising costs.
Rising mortgage and rent costs are increasingly impacting middle-class Americans. Research from Realtor.com found that even Americans earning around $74,000 annually, which is considered a good or even high salary in some parts of the country, could afford a median-priced home only in West Virginia or Louisiana. A Redfin survey found that 44.4% of American homeowners and renters were struggling with their monthly payments, with 6.4% reporting they moved in with parents and 6.2% reporting they moved in with other relatives.
A few ways to reduce this expense include finding a roommate, moving to a more affordable location or renting out extra space on a short-term platform like Airbnb. The goal is to help you manage your monthly expenses by reducing the most expensive ones.
Expense 2: Unnecessary Subscriptions
“We always tell consumers that the first thing they should do in times like this is conduct a thorough review of all their recurring charges that hit each of their bank accounts and credit cards every month,” said Michael McAuliffe, a financial expert and president of Family Credit Management. “You have to ask yourself, which ones are truly a necessity, and be brutally honest with yourself — you can live without a lot, and most of our recurring expenses are wants and things that make our lives more convenient, not necessities.”
Many Americans are spending more on subscriptions than they realize because small payments can accumulate over time. According to CNET’s second annual subscription survey, the average American adult spends $1,080 annually on subscriptions and about $200 on services they don’t use.
Tayne warned that since some purchases include an automatic subscription, you should review all the services you’re subscribed to. The experts agreed that this is one of the quickest ways to cut costs, since you’re likely paying for something you don’t use, and you can cut it out with a few clicks.
Expense 3: Treating Yourself Too Often
Tanye emphasized that unnecessary purchases and expenses frequently eat into consumers’ budgets because of the excitement of treating themselves to a small indulgence. “There are more frugal ways to indulge, and staying within your budget amid rising costs is one of the best things consumers can do for themselves,” she explained.
McAuliffe added, “Unfortunately, many of the cliché tips to save money are popular for a reason. Buying lunch out every day is expensive and unnecessary.” While you do have to eat, you don’t have to eat out for every meal, since these expenses add up quickly. You may want to consider treating yourself less frequently until you get your budget under control so you don’t end up in debt.
McAuliffe noted that every dollar you don’t spend today on something that doesn’t help you in the long run is a dollar you can use tomorrow for something that really matters to you.
Expense 4: Spending Too Much on Your Phone Bill
“It’s also worthwhile to research negotiating your phone bill,” remarked Tayne. “A lot of consumers don’t know that they can call up their mobile provider on an annual basis to negotiate their plan, often resulting in a decreased bill for the New Year.”
If you’re struggling with your monthly budget, you’ll want to ensure that you’re not overspending on your cell phone. You may not need the plan with the most data if you’re always connected to Wi-Fi, and you may not have to upgrade your phone every year.
Expense 5: Purchasing Everything Brand New
Another significant expense that you may want to cut from your budget is purchasing everything brand new. Tayne elaborated, “If you need furniture or other home items, look first to marketplaces for gently used items, which are often a better deal and more environmentally friendly.” You may not have the budget at this time to purchase only new items, and you don’t want to end up financing a couch you can’t afford.
McAuliffe concluded, “I think we all have to accept that prices have gone up faster than our incomes, and it’s unlikely to level out anytime soon. You can either make the hard decisions today to remove things from your monthly spend that you don’t need or let your credit card balances build because you didn’t want to live a little less comfortably for a while.”
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