Most Americans don’t need any data showing them that everyday expenses are pricier than they used to be. Every trip to the grocery store reminds them of that.
But it can be difficult to know just exactly how much more we’re all spending, unless we look back at just how much prices have changed over the past few years.
When it comes to America’s top three expenses — housing, transportation, and food — inflation has weighed heavily on our monthly budgets. Here’s how much prices for these three necessities have gone up since 2020 and how to deal with the rising costs.
House prices rose nearly 27%
Housing is the largest monthly expense Americans have, and according to Federal Reserve data, the median transaction price for a house has jumped 26.9% since 2020.
Increasing house prices over the past few years mixed with rising interest rates have made homes unaffordable for many people. Redfin recently noted that potential home buyers need to earn $113,520 to afford a median-priced home — 35% more than the typical household earns.
Rental prices are also straining many people’s budgets, as they have increased 30% since before the pandemic.
How to save on housing costs
Renters may be able to save money by signing a lease during winter months. Realtor.com says that many apartments drop their rent prices in the offseason between November and January. If your lease is up for renewal during those months, negotiating for a lower rent may also be possible.
One overlooked way for homeowners to lower their costs is to shop around for a better homeowners insurance rate. Consumer Reports says that just 13% of homeowners shop around for insurance, but when they do switch, 39% did so because they found a better price.
Tip: Consider bundling your home and auto insurance, which can save you up to 23%, depending on the insurance company.
Additionally, as house values have jumped over the past few years, some homeowners are appealing their home’s assessed value to try to lower their tax liability. You may have to hire a professional to do an assessment and will likely have some paperwork to complete, but if your home’s value has been assessed too high, appealing it could be a smart financial move.
New car prices are up 23%
The second-largest monthly expense for Americans is transportation. Car payments are the most expensive contributor to transportation costs, and they’ve gone up considerably as new car prices soared 22.8% from 2020, according to Kelley Blue Book. That increase means the average transaction price of a new car is now $48,247.
Another reason for the increase comes from car insurance costs soaring 38% since 2020. Insurance costs have jumped as some insurance companies have suffered losses from catastrophic weather events.
How to save on transportation costs
One of the simplest ways to save on transportation costs is to be careful how much you spend on a new car. New cars quickly lose value after they’re purchased, and in 2023, Americans owed a record high $6,064 more on their car loans than the vehicles were worth, according to Edmunds.
Additionally, just like with housing, one way to save on transportation costs is to shop for a better insurance rate. Data from Jerry shows that 60% of people who get multiple insurance quotes end up finding cheaper car insurance.
Grocery prices are up 25%
Rising inflation over the past two years has strained Americans’ monthly food budgets. According to BLS data, food costs are now 25.2% more expensive than they were in 2020.
And by some metrics, it may be even higher. The Wall Street Journal recently analyzed data on common grocery items purchased in 2020 and found that the grocery list for the same items is 36.5% more expensive now.
The Federal Reserve said this month that inflation hasn’t made as much progress this year as it hoped, which means costs could continue to tick higher for some food items.
How to save money on food costs
My family takes a monthly trip to Costco for bulk food items to save on food costs. Buying in bulk doesn’t make sense for all of our food needs, but stocking up on non-perishables, snacks for the kids, and some drinks helps lower our food costs. Depending on what you buy, some data shows shopping at Costco could save you $1,000 annually.
You may also want to consider using virtual coupons to cut down on the cost of groceries. There are also lots of great apps that help you track down the best deals and many of them even give you cash back when purchasing through the app.
It’s impossible to avoid all of the price increases over the past couple of years, but examining your home and auto insurance premium payments, shopping at discount warehouses, and even appealing your property tax assessment could help you lower your monthly expenses and fight back against inflation.
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