$4 Gas and Fragile Finances

Right now, as I look at AAA’s Daily Fuel Gauge Report, the nationwide average for a gallon of regular unleaded gas is $3.53. Just one month ago, it was $3.12 per gallon, a $0.41 jump.

I’m lucky – I work at home. My wife is at least somewhat lucky – she commutes in a fully-paid-for car that gets 45 miles to the gallon. The rising price of gas isn’t crunching us much at all.


Of course, I’d also have to be blind not to see some of my Facebook friends already talking about how it’s a struggle for them to hit the gas pump once a week and have to drop an additional $10 to fill their tank that they barely have. Examples of such comments (often tongue-in-cheek, of course):

Move over Weight Watchers, there is a new way to lose weight. It’s the “I can’t afford to buy groceries to feed myself because I just filled my gas tank” diet. And its companion plan – “I’ll Be Walking Soon – So I’ll Really Peel Off the Weight”!

Just filled up my gas tank. Just emptied my wallet.

Gas in the tank or food on the table? I’ll fill up, but it’ll be beans and rice for a week!

While these folks are taking the rise in gas prices lightly (for now), there’s certainly a real worry underneath all of these statements. How will I make ends meet if the price of gas continues to rise?

Yes, it’s easy to say that such a concern is the result of fragile finances. If your apple cart is upset by a small rise in gas prices, the logic might go, then you’ve not been making reasonable financial choices.

The reality of it is that many people are in that very situation. They’re not making much income – or they’re unemployed. Their debt load is heavy enough that the income they do make is gobbled down by debt payments. They have a larger family than their income can really handle.

It’s not just the dollars you pay at the pump, either. Rising gas prices mean it’s more expensive to ship things across the country, which means that the price you pay for everything at the grocery store goes up because the cost of getting it to the grocery store goes up.

What can you do if you find yourself in a situation where rising gas prices make you nervous about making ends meet over the next month or two?

First, buckle down when it comes to frugality. There are countless little steps you can take to shave your spending, both active (making better choices, like choosing not to drink alcohol and drink water instead) and passive (permanent money-saving measures, like installing a programmable thermostat). I find that the active ones are more exciting but harder to sustain, while the passive ones are less thrilling but always stay in place, so try doing as many as you can of both kinds.

Second, don’t immediately spend that savings. If you make some good spending moves over the next month, you’ll probably start to see the proceeds from that in your checking account (or, at the very least, find yourself able to deal with rising gas prices). Don’t give into the temptation to spend it after being “good” all month. That’s completely self-defeating.

Instead, put that money into a savings account and forget about it (for now). It’s now your emergency fund. It’s the money you turn to when the chips are down. It helps bail you out when the transmission fails in your car. It’s how you put food on the table when you’re laid off. It’s what you turn to when you need a down payment on a replacement for your current car or a deposit on a new apartment.

I usually encourage people to build up $1,000 in their emergency fund. For many, this seems like an almost insurmountable task. But if you can shave just a few dollars a day from your spending on average, you’ll get there. If you can trim your monthly energy bill by $30, cut your monthly food spending by $20, cut down on your frivolous impulse buys by $20 per month, and trim your spending on gas by $10 a month by driving more thoughtfully, you’re saving $1,000 in a year.

Even better, if gas continues to go up, then you’ve got $80 or so a month of extra breathing room in your monthly budget.

Having stable personal finances isn’t simply for the rich or for the lucky or for the “good people.” Anyone can do this stuff if they choose to. You do not have to be caught in a situation where the whims of the oil market make it difficult for you to put food on the table. It’s your choice.

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