Do High Temperatures Turn Heat on Your Finances Too?

It was a hot summer day and Mary decided to crank up the air conditioner. She knew that it would cause her energy bill to go up, but she just couldn't take the heat. As the month went on, the temperature kept rising and so did her energy bill. In the end, she was stuck with a bill that was over double her usual amount. This got her thinking, does the heat affect her finances in more ways than she realized?

The Cost of Cooling

Mary's experience is not unique. During the summer months, many people turn up the air conditioning to stay cool. According to the U.S. Energy Information Administration (EIA), cooling costs account for about 6% of the average household's energy expenses.

In areas with extreme heat, such as the southern and western United States, those costs can be even higher. The EIA reports that households in these regions can spend up to 20% of their energy budget on cooling.

To put that in tangible terms, let's consider a family with a monthly energy bill of $200. During the summer months, their cooling costs might account for $12 of that bill. However, if temperatures soar and they need to use more energy to stay cool, that cost could easily double to $24 or more.

The Impact on Spending

But cooling costs are not the only way that heat can affect finances. When the temperatures rise, people tend to spend more on things like ice cream, cold drinks, and outdoor activities.

While these expenses may seem minor, they can add up quickly. A few dollars here and there may not seem like much, but over time it can add up to a significant expense. According to the Bureau of Labor Statistics, the average household spends around $2,500 per year on entertainment and other discretionary expenses.

During the summer months, when people are more likely to spend money on outdoor activities and vacations, that cost can increase. For example, a family of four that goes to an amusement park for the day can easily spend over $200 on tickets, food, and souvenirs.

The Importance of Budgeting

So what can be done to mitigate the financial impact of high temperatures? The key is to be proactive and budget accordingly.

First, take steps to minimize cooling costs. This might include turning off the air conditioner when you're not home, using fans instead of air conditioning when possible, and keeping the blinds closed to block out sunlight.
Second, be mindful of discretionary spending. If you know that you tend to spend more on entertainment or outdoor activities during the summer months, adjust your budget to account for that increased cost.
Finally, consider ways to earn more income during the summer months. For example, you might take on a part-time job or start a side business that can provide extra income to cover the additional expenses.

By taking these steps, you can help ensure that high temperatures don't turn up the heat on your finances.

Conclusion

The summer months can be a time of fun and relaxation, but they can also be a financial challenge. From increased cooling costs to discretionary spending, there are many ways that the heat can impact your finances. By taking a proactive approach and budgeting accordingly, you can help minimize the financial impact and enjoy the season without breaking the bank.

References & Hashtags

References: https://www.eia.gov/consumption/residential/reports/2009/state_briefs/pdf/heat_cool.pdf, https://www.bls.gov/cex/2018/combined/age.pdf

Hashtags: #heatwaves #summerexpenses #budgeting #savingmoney #energyefficiency

Category: Family Finance