With the typical raise averaging 3 percent next year and necessities like rent and health care increasing way faster, consumers are going to be looking for ways to save a few bucks next year.
Turns out, there are a few areas where consumers spend their money that could see price drops in 2016. That’s welcome news, since every dollar saved on gas or prices or airfare can help offset those rising bills, or be put into a savings account.
That’s harder to do, as the increase in the cost of living nationally outpaces the growth of wages. Of course, there’s one way for a consumer to make almost all of his costs go down across the board: Move to a place with a lower cost of living relative to income.
A recent NerdWallet analysis found that incomes in Houston, Texas for example have grown by 33 percent over the past 10 years, while the cost of living has only increased 24 percent. In Atlanta, Georgia, by contrast, the cost of living increased 16 percent, but wages only grew 4 percent. A family making $100,000 in Houston would need $103,000 to live the same lifestyle in Atlanta and $178,000 in San Francisco, according to CNNMoney.
Despite the financial pay off, moving is difficult and can be expensive in the short term – especially for two-income couples with children. For consumers who won’t be calling a U-Haul anytime soon, here’s a list of things that will probably cost less no matter where you live.
Here's our list of 10 items that could cost less next year.
Gas prices. Gas prices were again flirting with $2 per gallon this December, and analysts say we could see prices as low as $1.79 this winter. The falling costs reflect a global over-supply and declining demand.
Computers. As consumers spend more time on tablets and phones, the need to upgrade desktop and laptop computers constantly is falling. That’s led to a decrease in demand in an already saturated market. Computer prices fell 4 percent in 2013 and 2014, and they’re expected to continue to fall another 1.4 percent this year and next, according to IHS.
Bonds The Fed finally appears poised to start raising interest rates next year, and when rates go up, the price for bonds goes down. That doesn’t matter for folks who own individual bonds and plan to hold them to maturity, but weak prices will hurt the value of bond funds. Switching from intermediate- to short-term bond funds will shield you from interest rate hikes but will also bring a lower yield.
Drones As a growing number of companies introduce consumer drones, competition is heating up and driving prices down, particularly in the categories of aerial photography and toys. GoPro, which is set to unveil its entry in the category in 2016, is rumored to be pricing its pro drone below $1,000.
Financial advice. If 2015 was the year that robo-advisers really took off, 2016 looks to be the year that personal advisors fight back. The growing competition from robo-advisers will likely put downward pressure on the fees charged by traditional advisors, much like the advent of index funds pushed traditional mutual funds to focus more on costs.
Airfare Thanks to record-low oil prices and new competition from cheap international carriers, the price of high flying is going way down. Hopper travel data shows that the average price for a ticket in January will be at a three-year low. Part of that decline, however, is artificial as airlines move toward “unbundling” fees from tickets and charging passengers separately for things like choosing a seat or checking a bag.
Gold At an average $1,156 per ounce this year, gold is down more than 40 percent since its 2011 peak, according to The Wall Street Journal. The expected rate increase by the Fed as well as a stronger dollar internationally will keep an umbrella on the price of gold next year, depressing prices to an average $1,114 per ounce, according to bank polled by The Journal.
iPhones In addition to the iPhone 7, Apple is expected early next year to release a new four-inch iPhone that will cost less than $500. That price point would allow Apple to market the phone to more entry-level consumers as well as those in emerging markets.
Heating Costs It’s going to cost less for consumers to heat their homes this winter despite colder forecasted temperatures in some parts of the country, with prices falling 25 percent for those with oil heat, 18 percent for propane heat, 10 percent for natural gas, and 3 percent for homes that heat with electricity, according to the U.S. Energy Information Administration.
Antique prices. Prices for collectible furniture and home accessories have been falling for years, thanks to aging buyers, a sluggish housing market, and changing tastes. The trend appears poised to continue next year, which could spell a buying opportunity for savvy collectors.