The cost of living is the financial burden of living in a specific area, covering essential expenses such as housing, food, healthcare, gas, taxes, and education. It varies significantly between cities and is often linked to higher salary levels to maintain a standard of living. Why is the cost of living so expensive now?
The rate at which the prices of goods and services increase is known as inflation. An inflationary environment that raises the cost of food and other essentials could harm the economy. According to Inflation Calculator | Find US Dollar’s Value From 1913-2023 (usinflationcalculator.com), the annual inflation rate for the United States was 3.7% for the twelve months that ended September. Because of the increased production costs, there is a drop in the supply of goods while the demand for them remains constant. As a result, consumers pay more for the final goods since the increased production costs are transferred to them.
In today’s society, high demand for housing in desirable areas can drive up prices and rent. Rent prices worldwide have been surging at an alarming rate, increasing by 23.5 percent since 2019. Location is the main factor that affects rental prices. For example, a one-bedroom-bathroom apartment in Mississippi can cost around $400-$600, while a one-bedroom-bathroom apartment in Texas can cost $800-$1,000. It doesn’t matter which part of any state you decide to live in the cost of housing is going to continuously increase.
The financial stability and mental health of college and university students are greatly impacted by the increase in inflation. Students are under increased pressure to work longer hours due to rising living expenses. According to Average Cost of College in America – Value Penguin, the majority of four-year undergraduate students are paying between $6,000 and $15,000 for tuition and fees. As a college student, I think that the cost of tuition should be lowered because we are already in debt from accepting loans to further our education. The government gives college students the financial help to earn a degree and just expects us to be fully prepared to pay them back within six months of graduating.
The cost of living raise for employees isn’t determined on job performance or promotions. Inflation results from businesses failing to keep up with the high demand for products and services, which is what happened to cause the fastest inflation in a generation. Workers want more money because of the expense of inflation. Businesses must boost their prices in reaction to these compensation increases. The wage-price spiral never stops as expenses rise along with these wages.
The individual income tax system in America is progressive, meaning that the higher your income, the higher your tax rate. Conversely, tax exemptions and credits typically benefit lower-income earners more. Price increases are likely to occur for a variety of reasons, some of which are more evident than others. Increases in indirect taxes, such as those on imports, are expected to have an immediate impact on the cost of living.
Overall, the cost of living is going to continuously increase. There’s nothing we can do about that, especially for our monthly necessities. Although you cannot stop inflation, you can lessen its effects on your finances by adjusting your spending and budget.