Child Poverty More Than Doubled in the U.S. Last Year. Here’s Why

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The childhood poverty rate has jumped above 12%. Read on to find out how you can help improve your personal finances. 

The latest data from the U.S. Census Bureau shows that the childhood poverty rate more than doubled last year to 12.4%, compared to a rate of 5.2% in 2021. The main reason for the jump came from the end of stimulus payments and expanded Child Tax Credits that helped families during the pandemic.

The result is that children and families who were lifted out of poverty during the pandemic have now fallen back into it, returning the childhood poverty rate to where it was before the pandemic. But what makes this especially difficult for many families right now is that inflation has soared since that time, making nearly everything more expensive.

Here’s a look at why some families may be struggling more than before, as well as a few suggestions to help get your personal finances on track if you’re having a hard time managing costs right now.

Spending on these three things has gone way up

Pandemic-era stimulus help was bound to end at some point, but the problem for many Americans is that their financial situation has become much more difficult over the past few years.

Expenses have soared for Americans, weighing down on their buying power. The latest data from the U.S. The Bureau of Labor Statistics shows that the average American household spent $6,081 per month in 2022, up from $5,557 in 2021.

Here are the three key areas where American spending has increased.

1. Housing spending is up 7%

The average amount spent on housing jumped 7.4% in 2022, after a 5.4% increase in 2021. Considering that housing is typically the largest expense in most people’s budgets, the rapid increase is causing pressure on many households. Americans spend 33% of their monthly income on housing, while many financial experts recommend spending less than 30%.

2. Transportation spending is up 12%

Transportation expenses include everything from buying a vehicle, fuel prices, and public transportation. Spending in the transportation category has risen sharply over the past year, with a 12.2% increase in 2022 coming on top of a 11.6% increase in 2021.

3. Food spending is up nearly 13%

And finally, one of the biggest spending increases for families over the past two years has been on food. Spending for food increased 12.7% in 2022 on top of an increase of 13.4% in 2021.

How to get your finances back on track

All of this increased spending has put pressure on many Americans and is likely the culprit for American credit card debt recently reaching a record $1 trillion.

Here are a few practical steps you can take to potentially help your situation.

Track spending with a budgeting app: Knowing where your money is going is a good first step to get your finances under control. There are easy-to-use budgeting apps that can categorize your spending for you, helping you find potential areas to scale back.Focus on housing and food costs: These expenses are two of the largest for most Americans, so it’s worth looking at a few ways to lower your food costs and housing expenses. For example, you may consider negotiating your rent with your landlord or researching government assistance programs.Watch credit card spending: Many Americans have reached for their credit cards as inflation has soared. I’ve begun pairing down my own card usage, and doing so has not only helped me keep track of spending better, but it’s helped me spend less.Assess your debt: Whether it’s credit card debt or other loans, taking a closer look at what you owe, what interest rate you’re paying, and how long it will take to pay off your loans is a first step to coming up with a plan to pay off debt.

There’s no quick fix for anyone who’s looking to get their finances back on track, but taking the time to look closely at your monthly payments, and assessing what can be changed, could be a great first step.

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