Here’s how ‘washing up’ can hurt your finances

Spaving,” or spending more to save more, has become a dangerous habit for cash-strapped Americans amid soaring inflation and mounting debt.

Although inflation decrease April, consumer price index still up 3.4% from a year ago.

Despite higher prices, Americans continue to spend.

By that point, credit card debt had piled up 1.12 trillion USD in the first quarter, according to a report from the Federal Reserve Bank of New York.

‘Consumers overreact to deals’

Retailers are increasing promotions against their thinner margins. According to data analytics firm Numerator, from March 2023 to March 2024, temporary discounts increased 72% and overall promotions increased 15%. Free shipping offers, “buy one, get one free” deals and minimum order quantities are successful ways companies entice consumers to “give away.”

“If you’re spending more money because you’re now focused on the deal instead of what you’re getting, that’s when it gets real,” says Charles Chaffin, co-founder of the Institute of Financial Psychology. danger”.

More from Personal Finance:
Don’t rush to take money advice from TikTok – here’s why
The average consumer currently carries $6,218 in credit card debt
The rise of the ‘lady trader’ – why some women say they don’t want to work

The personal savings rate — or the number of people who save as a percentage of their income — was is on the decline as households spend down their pandemic savings and stimulus checks. In April, the figure was 3.6%, compared to an all-time high of 32% in April 2020, according to for the US Bureau of Economic Analysis.

“Consumers overreact to deals because they feel like they have less money than they did before,” said Melissa Minkow, director of retail strategy at consulting firm CI&T. “It’s just a strange combination of factors that are creating this very unique retail environment.”

While saving isn’t always negative, continuing to make unplanned, impulsive purchases can have serious impacts on a consumer’s long-term financial goals.

“At a basic level, if we have debt that we can’t pay, it will affect our credit score, which will have a huge impact on our ability to buy a home, our ability to finance for big purchases and whatnot,” Chaffin said.

Clock video above to learn more.


News 7F: Update the world's latest breaking news online of the day, breaking news, politics, society today, international mainstream news .Updated news 24/7: Entertainment, the World everyday world. Hot news, images, video clips that are updated quickly and reliably

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button