Economic burden of middle class
The current economic crisis that U.S. citizens face: Low-income people receive fewer benefits than years before, and the middle class is heavily burdened with the increase of taxes and change of tax bracket. The two contributors helping to keep the current crisis ongoing are inflation and so-called “shrinkflation.”
Inflation is a general increase in the prices of goods and services in an economy. Inflation started once the pandemic occurred, and domestic and international businesses took a hit from delayed shipments. Delays caused companies in various industries to increase prices of products to make up for losses. The increase in prices and job loss caused many families to manage from a scarcity perspective.
Shrinkflation followed shortly after as businesses used this cost cutting strategy. Shrinkflation is a reduction in the size or weight of retail products, especially packaged food items, with no corresponding reduction in the retail price. These two methods have caused people to implement money-saving strategies to survive the crisis.
“When we look at shrinkflation, a few things we can do to combat it is buying our groceries in bulk as goods bought in bulk are cheaper per unit and last longer,” said Roberta A Fitzgerald, a financial advisor from Northwestern Mutual. “Another thing people could consider is buying store brand goods as they’re cheaper and usually the same product with a different label. People should look into buying from discount stores as it is the same product for less.”
Another thing that has caused prices to go up, especially in fast food and driving services, is the current push for better pay and benefits. Fast food restaurants like McDonald’s, Wendy’s, and Chipotle, among others, endured a strike season where their employees across the nation advocated for better pay so they could better support themselves during the economic crisis. Uber drivers wanted better base pay, benefits, and insurance for safety concerns. Both industries made changes, but to offset the cost, they hiked up prices for products and services, essentially passing through the increase in cost to consumers.
“People have to learn how to budget and live within their means to better understand their cash flow, which helps them understand where to allocate their money for needs. The second step is to take any extra money and split that between ridding themselves of debt and putting some in a high-interest saving account so it can occur over time.” Fitzgerald said as she spoke about the system people should follow with their money. “ The best way to stay disciplined with this plan is to automate your bills and savings because you don’t have the burden of worrying about where your money is going and can instead focus on how to get more money.”
Fitzgerald also advises people to get a financial advisor to help them. The first place to start is their local bank, as their advisor will only cost a few dollars, and you still receive competent and excellent help. Fitzgerald is taking clients in, and you can sign- up for her help by visiting Northwestern’s website and clicking on the ‘About us’ option.
