By Kimberly Pangaro | Kimberly is a mom of four daughters and the owner of the lifestyle parenting media company Atomic Mommy. When she’s not running her company or momming all day, she’s writing about family life.
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Russia’s war against Ukraine is hurting everyone’s bottom line around the world, and while it’s horrific in nature, the war is still happening. This leaves American families in peril while we try to figure out how bad the financial situation is going to get. As hard as it may be to believe, parents are not just people who raise children, we are also masters of the family budget.
With this financial responsibility, how can parents maintain their budgeting effectiveness, when a war thousands of miles away, is creating financial strife here in the U.S.?
The short answer is to buckle your money belt, and steer the ship towards tightening your family budget. So let’s dive right in and talk about how Russia’s war against Ukraine is going to affect U.S. family costs.
#1 Travel expenses.
Russia’s war against Ukraine will likely affect all travel, whether by car, train, boat or air. And to give you a real clear picture as to how much it will affect families here, then we need to break down the nitty gritty of the cost of oil per barrel.
As of March 11, 2022, the cost of oil per barrel has risen to over $109, and is expected to continue to rise according to recent reports. This exorbitant cost will affect gas prices at the pump, the monthly heating bill of your home, and anything else that oil contributes to in this country. We are already seeing this at the gas pumps.
According to AAA, the current national average of gas prices at the pump is $4.326 per gallon, and is still rising. As if that’s not bad enough, Alan Detmeister – an economist at UBS, says if oil barrel prices hit $120 per gallon, inflation could go up as high as 9% in the coming months.
What does this mean for families? If you are one of those parents who is constantly on the road with the kids, driving them back and forth to practices, games, and other outings, then your weekly gas budget is about to double, maybe even triple. And if you’re thinking, “Meh, I’m okay with this.”, then start worrying about the warmer months.
Traditionally, warmer months mean higher gas prices, and most people are okay with this. But with the national average already at higher levels than previous years, come summer time, that price point is expected to soar to over closer to $5 per gallon and with some states already seeing spikes closer to $7 gallon. Naturally, you need to ask yourself if you are financially ready for this.
As a mother of four, with a 6-cylinder SUV, I can tell you the cost difference will be a huge factor on my own budget. Here’s why. I currently travel, on average, anywhere between 20 to 30 miles per day. I put $20 of regular gas into my SUV once per day, and I only ever get a quarter of a tank. That means, as current gas prices in New Jersey stand, I am paying $140 per week, on gas alone. That’s up from what it was last year, when I was paying $80 per week. Obviously, if gas prices go up again, this will affect not just my pockets, but every parent’s pockets.
Forgetting for a moment everything I just mentioned about gas prices for your vehicle, let’s talk about travel by air. Assuming you have kids, you will probably want to plan some type of vacation for them, and if you do, then you will more than likely fly. Airplanes use jet fuel which also happens to follow oil price trends. This could mean that your airfare ticket will also be pricier.
To give you an idea of the difference from last year to this year, I’ll give you a personal account of how rising costs affects my travel. In February of 2021, I purchased tickets to fly from Newark Airport to West Palm Beach. The price per round trip ticket was approximately $330. I am currently in the midst of trying to purchase tickets for the exact same trip. The cost is significantly higher, at over $500 per round trip ticket, with some flights coming in at around $600 per person. If my math is correct, that’s a 66% increase in airfare cost. And since that increase came before Russia’s war against Ukraine, then you can expect roundtrip airfare to go even higher.
#2 The cost of heating your home.
It doesn’t matter if your home requires oil heat, propane, or natural gas. Heating a home depends on oil, in some way, shape, or form. As oil gallon prices continue to rise, the cost to heat your home will also increase. For the southern states, the winter is almost over and the warmer weather is impending. But for the northern states, our winter tends to last into March/April. Because of this, the cost of heating for most northerners, is about to explode.
Of course, all of this concern really depends on your financial situation. Maybe some families will be better off, while others may not be. The best way to give you some clear picture as to how this could affect you, let’s use my parents’ experience with oil heat. In the winter of 2008, the highest they ever paid for oil was $900. They paid this price every 3 months, and that was when heating oil per gallon only cost $4.16. Today, the cost of heating oil per gallon is at $5.25. If that number continues to rise, you can expect families with oil heat to feel a burning sensation where their money used to be.
#3 Your grocery shopping.
Grocery shopping is a must, if you are a parent. Whether you have an infant, toddler, school-aged child, or teenager, feeding them is an important part of parental responsibility. With that said, parents tend to write out weekly grocery lists and budget for what needs to be purchased. So, how does rising oil prices affect your grocery bill?
Simple. Food security is largely dependent on oil prices staying at affordable prices. Farmers depend on trucks to ship their products around the country and those trucks depend on fuel. If fuel costs rise too high, then it becomes harder for farmers to ship out their products. And if farmers can’t afford to ship out their products to the rest of the country, grocery stores everywhere will begin to see food shortages.
Due to Covid-19 and its variants, food shortages are already being seen as a result of labor shortages, product shortages, packaging shortages, and truck driver shortages. Factor in oil price surges, and the food items we’ve all become accustomed to having at our disposal, are about to go bye-bye. Things like eggs, chicken, beef, plant-based proteins, and dairy, are all currently seeing shortages. And if this continues, a rush of bulk-buying by consumers could also upend what’s left on the shelves.
If food shortages aren’t a good enough reason to be worried, then think about price surging, as farmers will be forced to raise their prices to keep up with demand. The higher they go, the more money families will need to shell out just to put food on the table. If families can’t afford these higher prices, then the well-being and nutrition of families is likely to be negatively impacted.
Strategies to Survive the Price Hikes
So what can you do about the price hikes, and how can you plan to survive it? There are some strategies you could use to combat the rising cost of oil and its effects. You can start with setting up an emergency cash fund, preferably not in banks. Why? If the U.S. can freeze Russia’s bank assets here, and Russia was able to interfere with our election in 2016, then it is smart to assume that Russian tech gangsters can hack our bank institutions and freeze our own hard-earned money. To avoid dealing with rushes at ATMs or banks halting pay-outs, it is always a good idea to keep some cash savings hidden somewhere in your home.
As for inflation, families should begin editing their current budgets to include the highest predicted inflation rates. This could help families predict how much money they will need in order to keep things flowing as functionally as possible. As an added precaution, families can also review their current spending habits for areas that are unnecessary or considered frivolous, and then start cutting out those expenses.
Now that you know how Russia’s war against Ukraine affects your bottom line, you can start implementing some of these strategies to offset any financial losses. Hopefully, with a bit of planning and budgeting, any volatile inflations will not take you by surprise.