Have you noticed that gas prices have dropped as of late?
It’s about time! A few years back I wrote about how historical gas price increases outpace inflation by quite a bit, which really put into perspective how expensive gas has become in recent years. I’m old enough to recall paying less than $1 per gallon of gas, around 20 years ago. (Side note: Dang….I really am getting older!)
Anyway, I’ve noticed recently that gas prices have been relatively low by standards of the last few years. This has been corroborated by a recent article from MSN which detailed some news regarding Energy Department forecasts on gas prices. They noted that in 2015, gas prices are projected to be under $3.00 per gallon, which is quite a bit lower than a prediction not that long ago.
So if gas prices do in fact stay low, how would that impact your spending and overall finances?
The thinking among some people is that with lower gas prices, people will have more money to spend on other things. Thus, if more consumer goods are purchased, this could be good for the economy!
Perhaps. But on an individual level, what would you do if your gas expenses were considerably lower on a regular basis? That’s the question I come back to.
I think that it’s probably true that with less money spent on gas, people will have more money available to spend. Math would dictate that. I also agree that with that additional money available to spend, people will generally do just that: spend it.
So basically, this means that the average person out there will not do the prudent thing from a personal finance standpoint. Which would be this: take the extra money that you’re saving on gas, and squirrel it way.
For example, if you were spending $120 per month on gas, but then that dropped to $90 based on price decreases, you could use the $30 to buy other things, or you could increase your monthly investments by that $30.
That small amount adds up! $30 per month equals $360 for a year, and invested over time that could result in quite a bit more.
So I’d like to see Americans take the savings from cheaper gas, and boost their savings instead of spending it. Here’s to responsible personal finance!
My Questions for You
What do you think about where gas prices have gone recently?
When you save money due to regular expenses being reduced, do you offset that by spending more on other things, or do you consciously try to save more money?
This true whether it is a necessity or just something you bought on sale. You should always put the extra savings into your savings account.
Agreed, that’s the wise thing to do.
It’s AMAZING gas prices have fallen so much. Haven’t seen $3/gallon in SF in forever. I shoulda bought an SUV instead of my Honda FIT! lol
I wonder if low gas prices is a reflection of low consumer demand.
Oh, but why buy and SUV and then get burned when prices eventually increase
I am so happy with the price cut in gas! We are using the money we save to pay ourselves back. We had bought a truck with stick shift and the first month we had it, I was still learning stick. Therefore my husband take it to work, which is a 60 mile commute, each way. Given that we had budgeted based on him taking the better gas mileage car we went over budget. We have since switched cars, but the cut in gas prices was a god send. By the end of the month we should have enough save to cover ourselves. Hopefully it lasts until then.
That’s great that you’re using the savings to pay yourselves back
Love the drop in gas prices. We recently upgrades cars and when from using unleaded in our old cars to super in new cars so haven’t see a big saving if we were still using regular grade gas, but I’ll take it.
There’s still money saved compared to what super grade prices would have been without the drop. Nice, isn’t it?
Happy to see the prices go down! We’re around $2.62/gallon at the Raleigh Costco. The savings aren’t huge, but every bit counts. Money saved will be going towards the baby fund buffer.
$2.62 seems like an incredible bargain these days!
The thing that always kills me when gas prices fall is how easily we slip right back into bad habits. The gas saving driving habits (avoiding fast starts and coasting more) are forgotten, and I just saw that big SUV and truck sales are on the rise over the past few weeks. What’s next, will they start selling Hummers again?
I agree, people do have short memories. It’s truly mind-boggling….but then again, many people just don’t think of personal finance the way we do.
Isn’t amazing how easily we fall back into spending more as soon as we start to feel a little bit richer? Whether it’s a few dollars at the gas pump or a discount offer in the supermarket, “I saved money on X” usually translates into “now I can splurge on Y & Z”.
Absolutely – that’s the issue. That desire to splurge using money saved is what keeps people running in place.
Cheaper gas prices just means more money for me to save. Although personally I perceive low gas prices as bad towards my long-term savings since I have stocks in oil. But for now, I’m loving my gas tank being filled up for only $15.
Well, you do bring up a point I didn’t think of: oil stocks. Aside from those, I think the cheaper gas prices can be a good thing!