The American Dream is increasingly out of reach for many due to the exorbitant cost of essential goods and services. From healthcare and education to housing and financial planning, everyday expenses have skyrocketed, forcing individuals to make difficult choices.
Let us look at some essential areas where Americans are cutting back due to rising costs.
Quality Healthcare
The U.S. spends a staggering $4.5 trillion annually on healthcare, equivalent to 17.3% of its GDP. Yet, quality healthcare remains a luxury for many Americans. A shocking 10% of the population lacks health insurance, hindering access to essential care like preventive check-ups and chronic disease management.
Soaring costs of premiums, deductibles, and medications force individuals to make tough choices, often sacrificing necessary treatments. While healthcare is a fundamental investment in well-being, financial barriers prevent Americans from reaping its full benefits.
Higher Education
The $1.74 trillion in student loan debt owed by U.S. borrowers highlights the rising cost of higher education. Tuition fees have skyrocketed, making college financially daunting for many students.
As a result, countless individuals rely on loans to fund their education. This debt has turned from a means to achieve career goals into a crippling burden. Graduates face monthly payments that limit their ability to buy homes, start businesses, or save for emergencies. Student loan debt has become a challenge, preventing an entire generation from fully participating in the economy.
Childcare
The rising cost of childcare is a significant burden for American families. While average childcare fees increased by 6% globally in 2023, the U.S. experienced an even steeper 9% rise. This excessive expense, particularly for infants and toddlers, forces many parents, primarily women, to make the difficult choice of staying home to care for their children.
This not only limits their earning potential but also contributes to the ongoing gender pay gap. The U.S. economy suffers as a result, losing an estimated $237 billion annually due to reduced female labor participation. Addressing the childcare crisis is essential to achieving economic equality and unlocking the full potential of the American workforce.
Energy-Efficient Home Improvements
It’s important to note that energy costs have steadily risen, outpacing overall inflation. The Bureau of Labor and Statistics reports a 4.4% increase in the electricity index over the past year. Cost is a primary deterrent, with 32% of respondents expressing concern about the overall expense of energy efficiency upgrades.
This perception is understandable given the upfront costs of projects like insulation, new windows, or high-efficiency HVAC systems. The incentive to save in the long term does not seem appealing due to the hefty upfront cost of upgrades.
Summer Vacations
Many Americans are unable to afford a summer vacation due to rising costs. A survey conducted by Redfield & Wilton Strategies for Newsweek found that 44% of respondents won’t be traveling this summer, with 53% saying they would have if the cost of living were lower. High expenses are causing people to choose cheaper destinations, more affordable transportation, and less expensive accommodations. This trend highlights the financial strain many households are experiencing, making summer vacations a luxury fewer people can afford.
Electric Vehicles (EVs)
The high sticker prices of electric vehicles (EVs) remain a significant barrier to widespread adoption. While the overall cost of ownership, factoring in fuel savings and maintenance, can be competitive, the initial outlay is substantial. The average selling price of a new EV in the US is a hefty $61,000, a premium of around $12,000 compared to the industry average for all vehicles.
This price point positions many EVs in the luxury segment, making them inaccessible to a large portion of the market. The rising interest rates exacerbates the financial burden of purchasing or leasing an EV as monthly payments increase.
Nutrient-Rich Foods
Many Americans opt out of purchasing nutrient-rich foods due to their high cost. Despite the known health benefits of consuming fruits, vegetables, and whole grains, the expense of these items can be prohibitive for many families. A survey by the Cleveland Clinic found that nearly half of Americans (46%) believe that healthy food options are more expensive, which discourages them from incorporating these essential nutrients into their diets. Consequently, individuals often turn to cheaper alternatives that are high in unhealthy fats, sugars, and sodium. This not only undermines their health but also contributes to the country’s rising obesity rates and related health issues.
Eating Out
Americans often avoid eating out at restaurants due to the high costs involved. For many people living paycheck to paycheck, dining out can quickly strain their budget. According to a LendingTree survey, almost 80% of Americans even consider fast food a costly option. This shift is driven by rising food prices, which make dining out a luxury rather than a regular activity. Consequently, cooking at home is a more economical and practical choice for many American families.
Mental Health Services
The United States is grappling with a silent epidemic: a mental health crisis. Shocking statistics reveal the depth of the issue: almost 50 million adults are grappling with mental health issues, and suicide continues to be the second-leading cause of death among U.S. children aged 10 to 14.
Despite the overwhelming prevalence of mental health conditions, access to care remains a significant challenge. A staggering 77% of adults with substance use disorders and over half of youth with depression did not receive treatment. The reasons are complex, but the cost is a primary barrier. One in four adults with frequent mental distress couldn’t afford to see a doctor, a troubling increase.
Long-Term Care Insurance
Many middle-class individuals avoid planning for long-term care due to its high cost. Long-term care insurance is expensive, and people are unsure if they will ever need it. Nursing home care can cost over $100,000 per year, and stays often last several years, quickly draining savings. As a result, families often bear the burden, sacrificing their own financial security to support their loved ones. This can impact their retirement plans and the ability to provide for future generations.
Quality Housing
The median home price in the US stands at a daunting $406,900, representing a 2.2% increase from the previous year. This upward trajectory, coupled with mortgage rates hovering between 6.81% and 7.31%, has resulted in a monthly mortgage payment of $2,192 – a staggering 19.2% increase year-over-year. Consequently, according to the National Association of Realtors, many Americans are trapped in a financial strain cycle. Unable to afford homeownership, many are forced into the rental market, where competition is fierce and costs are rising rapidly. This situation often leads to substandard living conditions, overcrowding, and a significant portion of income dedicated to housing expenses, leaving little for other necessities.
Financial Planning Services
Investing in financial advice and literacy is crucial for long-term financial well-being, yet many Americans find these services out of reach. Professional financial guidance can be costly, hindering accessibility for most of the population. This financial barrier, coupled with the fact that financial literacy rates in the US hover around 50%, contributes to poor financial decision-making and a lack of preparedness for major life events. Furthermore, many financial advisors require clients to maintain a substantial minimum asset level, further limiting access for those with modest financial resources.
