Be Prepared for These Startling Price Increases in 2016

We’re all aware of the decreases in gasoline prices over the past year, so much so that the average American family saved about $700 last year compared with the previous year. There are some reasons to rejoice about the decline of the price of oil and gas but also some reasons to fear it and its reflection on the current state of the world’s economies. That, however, is a subject for another post.

Be Prepared for These Startling Price Increases in 2016

Today’s subject is a warning of sorts. It’s meant to tell you about price increases you can expect this year on several main fronts that can affect you and your money. Costs in these four categories will definitely spike in 2016 and being prepared for them may soften the blow.

Price Increases to Expect in 2016

1. Housing Costs

According to Rent.com, an overwhelming 88% of property managers raised their rents in the past year. Estimates are that an apartment lease will cost you an average of 8% more in 2016 than the already record amounts from 2015, depending on the market area you choose to live in. This is a direct result from very high demand and a real shortage of rental properties that are still being affected by the decline in the affordability of houses and new homes.

2. College Tuition

The cost of both public and private colleges and universities continues a decade’s long trend of ever increasing tuitions and room and board charges in 2016. Based on estimates, costs for both public and private college education are expected to rise 7%.

There is some comfort in the fact that about 66% of students get some form of grants, scholarshipsm and employment from their school, but the bottom line is that students leave school today with a national average of $30,000.00 of debt after 4 years according to information from the Department of Education.

3. Health Insurance Premiums

As you probably already know, health insurance costs continues to increase despite the Affordable Care Act adoption. According to the federal government’s own statistics, the Silver Plan (the most popular) has risen 7.5% this year from last year, and that is after an increase of 6.3% from the previous year’s cost. While the term “affordable” is providing that to millions of Americans, the increases are alarming and seem to be something that we will be facing for years to come unless there are even more changes and adaptations in the laws and results from preventative care efforts which could take more decades to happen.

4. Groceries and Dining Out

Predictions are that the cost of groceries this year will rise about 2-3%. This comes after a very large increase in 2015 for things like beef and veal at 7-8% and eggs which soared by 17% due to the avian flu epidemic. The downsizing of food products will also continue in 2016 which means cost of almost everything you buy is increasing and has been for years just from that method of packaging alone.

When it comes to dining out, according to the National Restaurant Association, costs will increase about 2-5% over last year.  This is a result of the changing of dining habits over many years that seems to have all of us dining out more often than ever. For the first time ever, dining out has equaled grocery spending in the USA. With this increasing, and the underlying food costs rising, dining out will continue to be very expensive.

Dining at home is much less expensive than dining out, but the changing demographics of our society plays a big role. While Baby Boomers prefer to eat at home, Millennials and Generation Xers prefer to eat out more often, which has the restaurant business targeting higher profits.

 

While saving money on gasoline and even some forms of transportation like airfares, it’s easy to see that saving that money can be easily lost in the rising costs of these 4 major categories. Think carefully about the ways you can defend and save your money in advance of those necessary expenditures like 529 plans for your kids’ college now and meal planning in advance to save on spur of the moment restaurant expenses just to name two.

Some expenses may seem inevitable and unavoidable, but with thought, proper planning and constant monitoring, you can overcome. What expenses are you most concerned about for 2016 and what plans do you have to keep them under control?

Image courtesy of Stuart Miles at freedigitalphotos.net (with changes)

17 Comments

  1. Jamie

    Thanks for reminding me about these price increase Gary. I feel the need to boost my savings to be ready for these increase. I have to say this I am preparing for my college tuition of my kid. She’s entering college next school year.

    1. My guess is that it’s probably going up faster in other parts of the world since there seems to be shortages of many items like food in so many places around the world. According to financial experts, our economy, despite the volatility in the stock market, is still pretty stable compared to what’s going on in countries like China, for example.

    1. College tuitions have tended to increase every year, Brian, as you said. The only thing that we can do is start saving earlier so we can at least keep up. Public universities and community colleges still give us a major cost advantage and in many cases do not hurt anyone’s chances of landing a good first job. When it comes to your grocery budget, continuing to pay attention to prices cycles, coupons, and the rest is a good defense against the rising costs, but it’s not easy.

  2. We’ve definitely enjoyed the lower gas prices, but we don’t see as much in savings since we have a more gas efficient car now, with a smaller tank, and we don’t drive much.

    Still, every little bit helps. Especially considering the increasing prices you mentioned. We’ll be hit hard with the dining out/groceries, since we subsist mainly on convenience food. I guess it’s a good thing we’re already reviewing expenses to see what can be trimmed.

  3. College tuition, high school tuition; grammar school tuition; all are on their way up. I’ll be glad to get out from under that load but it looks like it won’t be until retirement. Aren’t late life babies wonderful?

  4. Kyle Suzanne

    The biggest hit for us over the years has been the health insurance premiums. My husband is diabetic so we always have to have a good comprehensive plan. Due to Obamacare the way his employer structures our health insurance has changed so drastically that the first half of the year can be REALLY tight. I’m really grateful that gas prices here are have gone down so much. Except of course since we live in Texas it has hurt many of our friends. So as usual the forecast is get rid of debt, own your own house & eat there.:)

  5. Thanks for these reminders! I didn’t realize that dining out has increased so much! I would love to eat out more, but costs, health, and having a picky-eating six year old keep it to a pretty low amount for us. I have struggled to keep our grocery costs under $400 per month, and it sounds like it’s only going to get harder this year!

  6. You are so right about housing payments Gary. For the first time in 5 years, my rent is going up $75, rather than $35. I was told the get has increased so much in the area, they had to raise our rent that high to try to catch up. Good thing I’m saving so much on gas. That will almost make up for the rent hike!

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