SAN MATEO, CA--(Marketwire - January 31, 2011) - Anyone who has recently purchased groceries knows that the dollar simply doesn't go as far as it did only a few months ago. That's because rising commodity prices are driving up the costs of basic household goods such as coffee, sugar, and clothing.
Consumer money resource Bills.com examines the potential impact from these rising prices on the average American family, and provides tips on how to rebalance your monthly budget. "This slow creep in prices, while sometimes imperceptible to you in the grocery aisle, can have a huge impact on your monthly budget over time," said Virginia Sullivan, VP of Consumer Education at Bills.com.
This problem is largely being driven by the rising cost of commodities such as corn and cotton, which have seen a steady rise in price over the last few years because of bad weather and increased demand. The United Nations' Food and Agricultural Organization's monthly Food Price Index pegs the cost of a basket of commodities at its highest level since 1990. These higher costs are now being passed on to consumers as the recession recedes, leaving many with bigger bills at the grocery or clothing store registers.
A recent Wall Street Journal story on the subject quoted economist Michael Swanson from Wells Fargo as predicting that retail food prices will rise by an average of 3.5% to 4% in 2011. While that sounds small, it is more than twice the increase experienced last year. This translates into real money that will be spent in the grocery aisle and at the neighborhood restaurant.
"Families still dealing with unemployment or having trouble balancing their budget already simply cannot afford to see their bills rise fifty, one hundred or more dollars per month," continued Sullivan.
To help prioritize and balance your budget, Bills.com offers its personal budget guide. It includes advice and information on building your budget as well as links to sample spreadsheets to allocate income and expenses.
Bills.com recommends the following percentages for allocating your income:
- Home mortgage and expenses: 35%
- Other (groceries, entertainment, clothing): 25%
- Transportation: 15%
- Debt (if relevant): 15%
- Savings: 10%
You can identify how much money you should spend in each category by multiplying each percentage times your income. Each family will have small variances within each category, but this is a good rule of thumb.
When rebalancing your budget, Bills.com recommends first validating your income and then prioritizing your expenses. This will help in making trade-offs between line items.
For example, if you need to add more money to your grocery or eating-out budget to cover higher prices, then you can easily identify lower priority items to remove. It may also be possible to keep your grocery bill consistent by purchasing off-brand items or re-prioritizing necessities such as milk or sugar over luxury items.
"Whatever your approach or budget, the important act for families is to acknowledge this trend and make the necessary changes now before you find yourself facing a huge budget deficit or even debt," recommended Sullivan.
For more information about balancing your family budget or to learn how to save even more money, please visit Bills.com. To ask a direct question of a Bills.com financial expert please click Ask Bill.
About Bills.com
Bills.com is the leading resource for free and personalized money help. Founded by a group of financial experts dedicated to helping consumers save time, money and stress, Bills.com is designed to give consumers confidence in making money decisions. The site offers useful information, powerful tools, and real money experts to give consumers the information they need in the way that they want it.
Contact Information:
Press Contact:
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Cosmo PR
415/596-1978