Americans Should Prepare to Spend an Extra $3,000 This Year Due to Higher Food and Gas Costs

Talk about a harsh financial blow to your wallet.

If you were hoping 2022 would be the year you ramp up your savings, you may need to rethink your plans. So far, we're starting off the year with record-high food and gas costs. And things could get worse before they get better.

A $3,000 hit to Americans' wallets

Gas prices have been soaring lately. On a national level, the average cost per gallon is already above $4. And AAA reports a $0.41 jump in gas prices during the first full week of the Ukraine conflict.

In fact, higher gas costs alone will likely force the average household to spend an additional $2,000 in the course of the year, according to new data from Yardeni Research. Meanwhile, Americans should expect to spend an extra $1,000 due to an increase in grocery costs.

All told, that means consumers are looking at losing an additional $3,000 this year just to cover a couple of basic expenses. That $3,000 doesn't even account for other rising living costs, like utilities and property taxes for homeowners.

How to cope with higher prices

Normally, when inflation rears its ugly head, the best thing to do is simply cut back on non-essential spending. Here's the problem, though. These days, many Americans are already maintaining a bare-bones lifestyle, partly as a means of recovering from the financial blow of the pandemic. And so for some, there just aren't many bills to reduce.

That said, if there are non-essential expense categories in your budget, now may be the time to rethink them. If cutting back on leisure activities and canceling cable, for example, are what it takes to avoid near-term credit card debt, then it's worth going that route.

If you can't cut back on living costs or really don't want to cut back (which is understandable -- we all deserve to splurge here and there and stay entertained), then another option worth considering is getting a second job. The gig economy is loaded with side hustle opportunities, and boosting your income could make your higher living costs much more manageable. You might even manage to eke out enough earnings to boost your savings account balance, thereby giving yourself a cushion if expenses like gas and groceries rise even further.

Finally, while you can't not spend money on gas or groceries, you can strategize on ways to spend less in those areas. That could mean carpooling to work with colleagues so you're not filling your tank as often. It could also mean planning out meals in advance to potentially save money at the supermarket, and stocking up on nonperishables when they go on sale.

A lot of people are having trouble making ends meet during these trying times. While you may not be able to cut back so much on food and fill-ups at the pump, you can try cutting back in other areas or taking steps to raise your income. Doing so could help you get through the next year even as your costs keep rising.