For the average American, inflation once seemed like a topic better suited to an economics class rather than a dinner table conversation. Thanks to the highest annual inflation jump in a generation, rising costs are now front and center in our daily lives. There’s no ignoring the painful realities of a paycheck that doesn’t stretch as far as it did even a year ago.
You’re probably well aware that soaring inflation has changed how we spend—less eating out, more staying home, and maybe postponing big household purchases. But did you know that record inflation also affects how we pay? A recent Forbes Advisor survey on payment apps suggests that many adults are splitting bills in new ways due to rising inflation.
Below are some of the survey’s key findings, followed by some ways to ease inflation’s hurt on your wallet.
1. Increased Use of Payment Apps
According to a 2022 survey by the Pew Research Center, a whopping 76% of U.S. adults report using four major peer-to-peer (P2P) payment software apps. Specifically, most people have made at least one transaction with PayPal (57%), followed by Venmo (38%), Zelle (36%), and Cash App (26%).
Although the cashless economy has been rapidly gaining traction for over a decade, there is evidence that inflation has accelerated the push towards P2P apps—at least among young people who already use them. Around half of 18- to 25-year-olds (53%) and 26- to 41-year-olds (50%) report relying on payment apps more often in response to rising costs.
2. More Bill Splitting Via P2P Apps
P2P payment apps seem built for sharing expenses—and 47% of adult users in the U.S. use them for this purpose. In addition to providing an easy way to pay people back, some P2P services offer the option to split purchases right in the app. However, rising inflation has made payment apps even more popular for bill splitting, especially among younger users.
Overall, just under half (47%) of all users say that inflation is prompting them to use apps to divvy up bills in ways they normally wouldn’t. That figure rises to 51% for millennials and Gen Z, with 58% splitting expenses at least once a week and 29% doing so daily.
What types of bills do people typically split with P2P apps? For the younger generations, the most commonly shared purchases relate to food. Nearly two-thirds (64%) of people aged 18 to 25 use payment apps to split restaurant bills and grocery purchases. For those aged 26-41, 58% split restaurant bills, and 51% share the cost of groceries via P2P apps.
3. The Rise of “Venmo Vultures”
By the looks of it, gone are the days when a forgotten wallet or lack of cash gave people an excuse to get out of paying. Apparently, also gone are the days where people didn’t worry about nickel-and-diming their friends. While nearly all users (86%) said $5 was too petty of an amount to ask for, 65% set that amount at only $3, and 13% think anything over a dollar is worth requesting.
While the rise of inflation can certainly make us more careful with every dollar we spend, small payment requests can also ruffle feathers among friends and family. In fact, 30% of young adults say they have a “Venmo Vulture” in their life who repeatedly peppers them with requests for petty amounts. The same percentage of young people think P2P apps make people less generous.
Wallet Protection Tips
While there are some indications that inflation is easing, we’re not out of the financial woods just yet. So, what can you do to protect your wallet in the meantime? Besides the tried and true measures (such as shopping sales and buying generic), consider trying out the following solutions.
1. Negotiate Bills
While not all bills can be negotiated, it never hurts to ask. Call your local cable company to see if they have any cheaper packages available. Ask your cell phone provider if signing up for a different plan can help lower your monthly bill. You may find that businesses in competitive markets—insurance, fitness centers, and credit cards—are more willing to negotiate with you.
2. Cultivate Creativity
Unfortunately, now is probably the time to cut back on discretionary spending like eating out and entertainment. Fortunately, that doesn’t mean you can’t have any fun. You may need to get a little creative.
Consider eating dinner out during happy hour when you can take advantage of low prices. Look for Groupons or low-cost days for local bowling alleys or water parks for family fun. Many public libraries offer free cultural passes to local museums and zoos.
3. Pay for Points
If you earn cash back or reward points with a certain credit card, consider using it for purchases you have to make anyway. Spend strategically, as some credit cards offer extra points for different categories like restaurants, groceries, or travel. Make sure to pay off your balance every month or you’ll face interest charges, which can quickly undo whatever reward savings you have accumulated.
You can also earn points by volunteering to put group purchases on your card, but make sure your friends pay you back quickly and in full. Otherwise, you may have to become the dreaded Venmo Vulture yourself.
4. Flee From Fees
Fees are pesky, sneaky, and seemingly inevitable facts of life. Still, you do have some control. Drop your pricey credit card for one with no annual fee. Walk the extra block to an in-network ATM that won’t charge you a fee. Look into moving your money from a for-profit bank to a credit union that offers free checking accounts. (And ask your financial institution about high-yield savings accounts while at it!)
Inflation Reduction Act & Healthcare with Dr. David Wilcox(Opens in a new browser tab)
5. Make More Money
This one may be easier said than done, but it’s worth trying. Maybe you have a hobby that can be turned into a side hustle—flipping furniture or refurbishing guitars, for example. Perhaps you have some sports memorabilia, power tools, or vintage stereo equipment you’ve been thinking of selling.
Perhaps you really want to get paid more for what you already do. Now could be the right time to ask for a raise at work. With today’s tight labor market, you might find that you have more bargaining power than you realize.
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