Are you frugal?
Some people enjoy it, no doubt. The challenge of finding the best deals and making do without things we might typically buy can be alluring.
With uncertainty on the rise in terms of job security, inflation, and the overall economy, it makes sense to up our spending awareness.
But it seems more and more Americans are becoming frugal out of necessity. We’re realizing that saving is now more important than ever.
Let’s take a look at the top 8 things Americans are cutting back on:
1. Dining Out
Many Americans are turning to their kitchens instead of restaurants to save money, a move that’s saving the average household about $3,500 annually.
Now, we’re fancying the simple things in life, all in the comforts of our own home. We’re cooking on our own or ordering food delivery from the likes of Uber Eats, CookUnity and Freshly.
The recent trend has been spending more on groceries to keep our bellies full, which unsurprisingly contributes to a decrease in overall spending for monthly food budgets. Although, this decrease is not nearly as much as we would like due to rising inflation of grocery costs.
But in the event you do dine out, there are certain credit cards you should use to maximize cashback.
To some, it may simply be a temporary trend, but for others, it may very well be the start of a more permanent frugal lifestyle, if you can call it that.
To save money, Americans are increasingly cutting back on vacation travel. This is likely a mixture of withholding by choice versus fewer opportunities to travel in general due to COVID restrictions.
But even prior to COVID, the amount of travel being taken had already been trending downwards.
A Bankrate survey found that not having enough money was the dominating reason for Americans taking less vacation time, followed by family obligations and busyness at work.
“There are some people that just don’t feel like they can take the time off,” said Mark Hamrick, senior economic analyst at Bankrate.com. “It’s really a function of how they view their standing in life.”
3. Shopping For Non-Essentials
American consumers are finally starting to get serious about paying down their debts, according to a Bankrate report.
It was found that 54% of surveyed participants had more emergency savings compared to the debt they owed on their credit cards.
We’re becoming especially cautious when shopping for non-essential items.
This suggests that there is increased belief in the importance of saving money for a rainy day.
“Over the past year, we’ve seen a marked decrease in impulse buying,” said Ted Rossman, an industry analyst at Bankrate. “In each of the last two years’ surveys, more than one in four people admitted to making an impulse purchase online or in a store.”
But compared to the more recent last 12 months, it’s been found that only 20% of consumers have been guilty of making such purchases.
Check out our handy guide to figuring out what is a need and what is a want.
4. Buying A Home
This one shouldn’t come as a surprise, as we’ve all seen house prices skyrocketing. To make matters worse, rent rates are further pricing people out of basic housing.
More than half of Americans are cutting back on buying a home, and a third have put off a vacation due to money concerns.
Cameron Huddleston, a personal finance expert, told CBS MoneyWatch: “They may be looking at the mortgage rate and thinking ‘This is not the time for me to buy a home,’ or they’re looking at what’s going on in the stock market and thinking ‘I don’t want to invest right now,’ but maybe they don’t have enough saved up for retirement.”
Adding to the problem is the fact that millennials who watched their parents lose homes during the financial crisis are more afraid of buying property now. Instead, they’re opting to rent.
Check out how to get rent-to-own homes via companies like Divvy Homes and Dream America.
Millennials are also less likely than older generations to purchase or lease a new car.
5. Going Out For Entertainment
Going out on the weekends isn’t as prevalent as before the pandemic came along.
As a matter of fact, the number of Americans who say they’re spending less money on going out for entertainment is at a 13-year high.
As of 2021, 48% of Americans said they were spending less money on entertainment, according to a Gallup survey — the highest percentage since 2005.
The percentage of Americans who say they’re cutting back on entertainment has been climbing since 2013 when just 38% reported they were spending less.
6. Bills And Utilities
When it comes to saving money, utility bills are an excellent place to start. According to a recent Gallup poll, Americans are scaling back on utilities.
34% of adults aged 18 to 29 said they’ve cut their utility usage in the last year compared to 26% of people aged 30 to 49 and 28% of people aged 50 or older.
Also, Hiatus and Rocket Money can automate the process of identifying expenses to cut down on as well.
7. Alcohol Consumption
Understandably due to the cost of alcoholic beverages, consumers have taken a slightly less enthusiastic approach toward drinking.
According to Nielsen data, alcohol sales volume is down by 0.2%, with beer sales declining by 1.4% and liquor sales falling by 0.7%.
This one ties in closely with a decrease in dining out. If you’re not going to be going out to restaurants, you’re probably not going out to bars to drink either.
Many people are moving to city centers, where they can walk, cycle, or take public transportation instead of owning cars.
We’re also doing a lot more work from home in general.
A change in scenery is quite nice, especially after you’ve become so accustomed to the daily commute to and from work
Furthermore, if you’re one of the lucky ones to own an electric vehicle, you benefit further by not having to spend money on gas any longer.
How Did We Become Frugal Over Time?
Americans are cutting back on a number of expenses. Some are small — like spending less on clothing, entertainment, and video games. Others are large — like cutting back on alcohol and tobacco, housing, and transportation.
Andrew Schrage, co-owner of Money Crashers, states, “We’re definitely seeing that consumers are becoming more frugal.” He cites several reasons for this:
- Consumers have become more aware of their finances and are doing a better job of budgeting (which is a good thing).
- The availability of more financial products has made it easier for people to manage their budgets and cut costs.
- The media is doing a better job of informing consumers about how to save money and be smarter with their finances.
- The Great Recession is still fresh in people’s minds, so people remember what it was like when times were tough.
For his part, Schrage said he’s cut back on dining out and entertainment expenses because those costs can add up quickly if you’re not careful; he prefers to use coupons and take advantage of deals when available.
Is Frugality Here To Stay?
The beautiful thing about being human is that change is a constant in our lives. Nothing ever stays the same. And hopefully, things will change for the better.
What kinds of changes have you made personally to cut down on expenses?
Do you think that frugality will fade into the past like bellbottoms, Reaganomics, and Miami Vice?
Or is it here to stay? Let us know! Also, how do you know if you are frugal and not cheap?