School is out, temperatures are high, and summer is in full swing. The start of summer means more vacations, concerts, trips to the movies, and beach days. Summer has always been a season of spending, but this year is a bit different. Recent data regarding inflation may greatly impact how consumers approach their summer spending, especially those in the non-prime category. However, this doesn’t mean consumers must put all their summer plans on hold until further notice.
Our Q1 2022 Financial Household Tracker Report found that for many consumers, especially non-prime consumers, the manageability of day-to-day expenses had already been significantly strained by inflation. It now appears that inflation is here for the summer.
The latest report from the U.S. Bureau of Labor Statistics released on June 10th shows that inflation was up again in May, with the Consumer Price Index rising by 8.6 percent since May 2021. According to the report, some of the most impacted goods were oil, gasoline, airline fares, food, and vehicles: all categories that directly affect how much it will cost to have a summer vacation or weekend getaway.
In March, we shared the details surrounding how Americans feel the sting of rising prices in their everyday life. In our Inflation Whitepaper, we found that rising gas prices were one area in which non-prime consumers reported causing strain on their households. Gas prices have continued to climb since then, and it appears that the high demand for gas is not going away any time soon. According to new estimates, 42 million Americans are expected to travel by car this Fourth of July weekend, surpassing the pre-pandemic levels.
Due to these rising costs, it is essential that consumers, especially non-prime consumers who are more vulnerable to these adverse effects, are savvy about how they approach their summer plans. For two years, people were dealing with feeling constricted because of the pandemic, and now they are eager to make up for lost time. With the dual-threat of inflation and a desire to splurge looming, a budget can be blown through quickly without some planning.
Some ways to control spending during the summer include:
- Many non-prime consumers have found that a staycation is a great way to spend time with family, explore their city, and save a few extra dollars.
- School is out for most kids during the summer months. With warm weather and longer days, utilize community resources to minimize entertainment costs for family activities.
- Research shows that grocery bills add up in the summer, so instead of hosting a cookout – potlucks are a great alternative so guests can bring dishes to share.
- Starting a home vegetable garden is not only a fun family activity but also an economical way to save money on produce. According to the Wall Street Journal, every $1 spent on green beans yields an average of $75 worth of produce. Starting small with an herb or container garden can still impact grocery bills.
- Set a firm spending limit on your summer and stick to it. Research shows that people are more likely to overspend when making individual spending decisions. Don’t think of every vacation expense as a separate decision. Think of them as all components of the same expense.
- Break up your summer routine with outings, small gatherings, and local adventures. A big “summer vacation” isn’t the only way to enjoy the summer. The pressure and expectations of creating a special vacation could make it easy to overspend on a budget.
Summer has always been an important and valuable time of the year. With kids out of school, fewer conflicts are getting in the way of necessary family time, and it is a great time to get out of the house and make memories that will last a lifetime. Even during times of high inflation and financial uncertainty, these will always be important priorities for people. It can be easy to overspend, especially after more than two years of various travel restrictions. However, with some prudence and planning, this summer can be one to remember.