From the archives of TGIF 2 Minutes – with updates, including perhaps why the US Federal Reserve is taking longer to start lowering interest rates…
“Mommy, Why are you buying our food at Walmart?”
…”Daddy, Why are we not eating my favorite fancy meals and brands of food?”
It is not quite Chef Boyardee and Ramen Noodles yet, but there is data reporting higher-end households shopping at lower-priced food stores (i.e. Walmart).* There is a lesson for kids and adults here. First a few more details.
Inflation is no joke; and can be the great equalizer. For even the highest-earning households, nearly everything is more expensive. Namely, food. Travel costs and Cable TV subscription rates have risen as well. Note that during the pandemic households became accustomed to –
- ordering out for food and meals
- taking delivery at home for all sorts of things
- therefore, cooking at home less
- opting to watch from home more streaming movies, Netflix (and other) series.
For those households who chose to cook at home more often, the ingredients were and may now be delivered or shopped for by a “shopper” and picked up curbside at the grocery store or delivered to the doorstep. Food and service costs have skyrocketed (partly the result of continued increases in wages for hourly workers).
It may sound extreme, but higher-income households who shop at Saks, Macy’s or Home Depot are shopping at those stores less often and focusing on the basics. Overall, shoppers are giving priority to food and essentials, with Walmart early on in the pandemic (back in 2020 & 2021) seeing huge gains in grocery – specifically from the higher-income household segment.*
The lessons are several (and beyond this list).
- For starters, inflation changes behaviors of ALL income levels. The smartest and most observant adults and children pick up on (or will pick up on) the reality that higher costs mean less money left over for “fun” and “splurge” items. Even the fact that an adult or child can define “splurge item” or “treat” is a win.
- At the earliest possible age or time, knowing when to cut back on pricier, more discretionary “treat” items or to reapportion spending around essentials can make or break present and future financial stability. Remember: these changes or cut backs need not be permanent!
- Not to beat the “emergency fund” drum, but emergency funds are meant for exactly the inflation cycle where we find ourselves today. Having an emergency fund or “rainy day fund” can make possible that future vacation or splurge item when the times calm down.
Awareness and being “real” about current inflation and overall costs are key. Also key is realizing that no one is perfect and no decision is perfect. Timing and luck (both good and bad) are factors when it comes to making major purchases and doing home renovations. Inflation and “shrinkflation” seem to be sticking around, so no better time than the present to take a closer look at overall spending and also teach kids – and adults – about the beauty of simplifying, even for a period of time.
The US Federal Reserve is doing its best but cannot always change consumers’ minds and habits as fast as it can change short-term interest rates.
*Nassauer, Sarah, “Walmart, Home Depot Give Cautious Outlook as Shoppers Spend More on Basics”. WSJ.com.