By Afshan Musani
Managing finances is an important aspect of life and yet it’s not something that you get to learn in school. You learn how a plant produces oxygen from adenosine triphosphate, but you don’t get to learn how to handle the money that you possess. Then you go off to college, you get a stable job while studying and make your living, pay your bills and run your kingdom with absolutely no prior knowledge of how difficult it’s going to be.
That is exactly what happens with majority of the college students but fortunately, I did not have to face that hardship. Freelancing as a writer from the age of 16, have me a source of stable money and the moment I started earning, I started to manage my finances. Understanding the concept that more is not always satisfying as there’s something known as marginal utility was one of the major concepts I had to get used to.
So, when I headed to college, money was not an issue as I always knew how to make it work with whatever I had. But then came the visa rules. As an international student, I am only permitted to work on campus and for a maximum of 20 hours. Anything other than that would be a major violation of my visa status that could result in deportation. Now, every working opportunity as a freshman on campus only pays minimum wage. Working 20 hours a week on minimum wage and paying my rent, my credit card bills, and other miscellaneous expenses was a responsibility I had never had before.
As we all know that grocery prices went up this month by 6.8% and meat went up around 12.8%, this was a hurdle that added to my already tight finances. Despite of consumer demand being the highest right now as everything goes to normal, there’s production deficit in the market which has significantly raised the prices. The groceries that I could buy for $40 last semester, now cost around $55 at least. The minimum wage increased by 8% but the expenses at the same time went up twice as much if not more as the inflation was not only noticed in grocery prices but also rent and electricity bills. The research suggests that the following is occurring because of “driven up by strong domestic and international demand, labor shortages, supply chain disruptions, and high feed and other input costs.”
The major concern is that people have now become extra sensitive to price changes as the jump becomes noticeable and have become cautious of where they spend their money on groceries. For example, a simple room freshener by Walmart’s own brand great value which once cost $1, now costs around $3 where are the competitive brands such as Glade has reduced its price and are selling it for as low as 88 cents. This raises a very important question with regards to the companies not reacting equally to the increase in demand with shortage in supply. This is where we see monopolistic competition changing consumer preferences.
As a student, when I encounter such changes taking place in the market, I know that my finances will now need to be adjusted. That changes my preferences, but also makes me more aware of the price changes. Though there are very few companies which have not increased their selling price, inflation has significantly changed my shopping. This includes buying lower quality goods, instead of the higher priced item. That also decreases the satisfaction I get from consuming a particular quantity of a commodity – something we talked about in Economics class.
People have been buying less or buying low quality goods because of the sudden surge in prices. From an economic perspective, if the consumption keeps decreasing at the scale it is currently decreasing at, supply and demand should meet at an equilibrium price that satisfies the supply as well as the demand.
Musani is a junior at the University of Missouri School of Journalism.