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Home Blog The Financial Impacts of the Ukrainian and Russian Conflict

The Financial Impacts of the Ukrainian and Russian Conflict

As a college student, or future college student, you may be worried about the Ukrainian and Russia conflict. The world is worried, and turning on the news, or scrolling through social media, has created a sense of uncertainty among us. Not only has the conflict caused heartache for the tragedies abroad and mental health concerns, but it also brings up the discussion about financial impact here at home.

Of course, financial impacts are a consideration across the world and fears about managing or maintaining a budget is normal, and okay. It can sometimes be hard to focus on your own personal concerns when so many others are hurting considerably overseas. It’s important  that you take some time to make sure you’re prepared for unforeseen circumstances in  your own life, even if it means stepping away from the media for just a bit of time to gather your thoughts and work out a plan.

There are many facets of the conflict abroad that will affect us here in the United States, including the negative financial impacts of war, and sanctions on Russia impacting our supply chain here in the states. If you already have a budget, or you’re working on creating your budget, you will want to examine where some adjustments may be needed as you manage the inflated prices of gasoline, food, and other daily necessities.

How to Manage Inflation, Some Advice for the College Student

There are many things we don’t know. Like, how long will the conflict continue, how will it resolve, and how long we will feel the financial impacts of the conflict? What we do know is that the prices of just about everything are going up. It’s going to cost more money for companies to produce products and operate, and in turn, it’ll cost more to purchase their products and services as they pass those costs along to us.

In this article, we’ll be covering a handful of items that will likely require you to reassess your budget. As you go through and update your budget, even more items may be affected by increasing prices in the coming weeks. Be sure to continually make updates to your budget, accounting for the ever-changing costs, as appropriate.

Increases in the prices of oil and natural gases

Even if you don’t own a car, price increases for oil can affect your everyday expenses. That’s because oil and natural gases aren’t just used for personal vehicles—they are used for airplanes, transport of food and other supplies, construction equipment, and may even be needed in your home. We are seeing record high prices at the gas pump, which means you can expect to see, if you haven’t already, price increases for just about anything.

While it is true that before the Ukrainian, Russian conflict began, the costs of gas had already been increasing due to the time of year, inflation and other causes. The price of oil and other natural gases are determined by international supply and demand, with prices set on a global level, not nationally. Which essentially means, the US is not responsible for setting these prices. However, the US has been buying oil and other natural gasses internationally for quite some time. If the price of a barrel of oil increases in the global market, the US would need to buy oil at those increased prices.

On March 8, 2022, President Biden announced a ban on Russian oil. Alongside President Biden, many other nations, like the UK, have also announced a ban on Russian oil. By effectively reducing the global supply with the Russian oil ban, this in turn created an increase on the global price for a barrel of oil. The US had previously been receiving around 10% of its oil from Russia so now we need to replace that oil to maintain businesses that rely on oil to operate.

On March 6, the average price of gas per gallon was $4.009, and it is set to keep climbing. While at first we anticipated the national average to increase over $5 per gallon, the Biden administration has taken some steps to help manage the increasing cost. According to a New York Times article from March 10, 2022, Russia’s War Is Raising Gas Prices and Roiling Financing Markets, gas prices are up 23% since the beginning of this year—and that was in March!! And here’s the thing, we don’t know how long we have to plan for these increased prices in oil, but from what we hear, it is anticipated to last through at least 2022. 

What should you do about your fuel budget? Expect to spend at least 30% more from what you have been paying. And keep an eye on prices! Then be conscious about when you get in the car; the gas cost can be substantial even for what is considered a short trip. To help ease the increase in price, it may be time to explore public transportation, carpool, or dust off the old bicycle when possible, to help reduce the amount you need to drive. And if you’ve always have been the friend to offer others rides, it may be time to ask your friends to help cover gas if they are able. The cost of gas is significant, and you need to make sure you can stick to your budget and stay within your monthly expenses.

Increased Cost of Rent

You may also be noticing a trend of apartments increasing their rent. Housing expenses have been increasing for months, and this isn’t expected to change in many metropolitan areas. Keep an eye on these trends before you need to sign a new rental agreement. It may be worth it to explore all your options before you make a decision about where you are going to live during your next term. If you are already in an apartment, you should check to see if you can expect to see an increase in your rent before you renew your lease. Compare the costs of on-campus housing, off-campus housing, and be open to having roommates. Having roommates can not only help drive down the cost of your actual rent but splitting apartment expenses will be more affordable. It may seem appealing to live on your own but saving money on this expense can help alleviate the increased costs of other items.

And don’t forget those moving expenses! If you are hiring movers, don’t be surprised if you see some of their prices go up. Once again, the cost of fuel can increase the cost of movers driving their trucks to help you get from one place to another. If you’re not hiring movers, keep in mind the cost of fuel for yourself. If you rent a large box truck, they tend to come with large gas tanks!

Increases in the price of food due to supply chain issues

There are two things to consider when it comes to the cost of food: the cost of transporting the food and the price to grow the food. When it comes to transporting the food from farms to suppliers, and then from suppliers to your grocery store, because of the necessity of fuel will come added costs due the rising prices of gas. Furthermore, Ukraine and Russia were major exporters of fertilizer, wheat, and corn. If the cost of fertilizer increases for US farmers, their cost to grow food and maintain their farms increases, therefore we can expect our food prices to increase as well.

If you’re living on campus and have been taking advantage of the meal plan, the cost of your meal plan may slightly increase from last year.  Having a meal plan will set a flat rate, since you pay upfront for the term or year, for the cost of most of your food, especially if you stick to eating at the dining halls. However, if you are purchasing your food from a grocery store, or going out to eat, you will surely notice the prices start to creep up on your regular purchases. Make sure to account for that and make increases to your food budget. To help keep those costs down, it may be worth it buy less expensive store brands, use manufacturers coupons or try to find grocery stores with cheaper prices.

Many grocery stores these days have apps for electronic coupon clipping and sales, and the app even makes it easy to make a shopping list. And speaking of shopping lists, it’s smart to make one! If you don’t make a list, you may notice that when you make a stop at the grocery store with the intention of only buying a few items, you always end up with a full cart of stuff you don’t necessarily need and didn’t intend to buy. If you have a shopping list, you can estimate the cost of your grocery trip and help you stick to your budget. And if you use the grocery store app, you’ll be sure to buy the items which have coupons or are on sale.  If you think you’ll be tempted to add items you don’t need when visiting the store, order your food online and pick it up at the store, preventing the desire to buy more than what you truly need and ultimately saving you money on your shopping trip.

Stick to Your Budget

It may be difficult, but it’s time to look at your budget. Honestly, we just told you that living life is going to be more expensive. We told you to increase your budgets in housing, transportation, and food. Where is that money going to come from?

Well, it’s time to get to the base of your budget, your “needs”. Everyone will have different needs but think of this as what you need to survive and succeed—make sure that “wants” stay out of your “needs” list.

Now what happens if you can’t increase your budgets for your needs? There are a few things you can do. Obviously, you can try to find ways to save money. You may just need to think about everything you want to do a little bit more. Reduce the amount of fuel you need by finding options other than driving, like using public transport, choosing a few nights in, or carpooling with friends or coworkers. When it comes to groceries, it’s time to be a savvy shopper. Use coupons and purchase items on sale, or purchase store brands over the brand name item.

Another option, find ways to supplement your income. It may be worth it to take a look at the part-time jobs or side hustles you can pick up in your area. A lot of companies, stores, and restaurants are looking for help. And the employees have spoken over the last year and have demanded higher wages, so you may be able to find a part-time job that provides you with decent supplemental income.

Rising Interest Rates 

Keep in mind, interest rates are rising. The Federal Reserve just raised rates and anticipates raising rates a few more times in the coming months. What does that mean, borrowing money may be a bit more expensive! If you already have fixed rate loans (federal student loans since 2006 are fixed rate), you’ve locked in those rates through the repayment of your loan. However, if you have variable interest rate loans, those rates can change, and if they increase, you can expect your payment to increase.

If you need to borrow money in the future, you may notice the interest rate on your loan is higher than it’s been. That’s because all student loans depend on current market rates, trends, and the rates set by the Federal Reserve. In the past few years, we have seen record lows, but with rates on the rise, we can anticipate interest rates will rise for student loans in the coming year.

Be conscious of your mental health

The last few years have been challenging, and the latest conflict has only added to our collective sense of anxiety for the world. Stay on top of your mental health. If you are already in college, you may want to see what type of mental health resources are available on campus. Even if the conflict is overseas, the anxiety of war, suffering and pain of others can cause very real feelings of sadness.

If you are feeling like you are in crisis or need help, there are free, confidential resources available for you.

  • The National Suicide Prevention Lifeline, 1-800-273-8255 (TALK), en español 1-888-628-9454, or the Lifeline Chat on the web can be reached 24 hours per day.
  • Crisis Text Line, all you need to do is text “HELLO” to 741741. The Crisis Text Line is available to anyone in the US, 24 hours a day, seven days a week.
  • Veterans Crisis Line, 1-800-273-8255 and press 1, or text 838255. There is even a Veterans Crisis Chat online. This resource is also available 24 hours a day, seven days a week.

For more free resources, be sure to check out this page from the National Institute of Health: https://www.nimh.nih.gov/health/find-help