Over the past year, I’ve noticed that I can barely cover my bills every month. At first, I chalked it up to the rush of post-COVID activities (I went to Italy last summer like everyone else), but now I’ve realized it’s probably inflation. Either way, it’s getting worse and worse, and it seems like my money just disappears every month even though I’m not doing anything wild. I cook most meals at home and pay about the same amount in rent (it went up $150 a month this past September, to $2,300 a month, which is still a good deal for my neighborhood and I love my apartment).
I got a $5,000 raise at work right before the holidays, which should help — my salary is now $78,000 total. I recognize that this may sound like a lot, but in New York it goes pretty fast. I recently had $42 in my checking account after I paid all my bills, which was scary. I still have an emergency cushion of about $5,000 in a savings account, but I’m not growing that at all and I probably should (in fact, I recently dipped into it to buy a flight home for Christmas).
My biggest issue is that it feels harder to save than it ever did before, even though I’m not doing anything different and technically making more money. It makes me anxious that life seems to be getting more expensive even though my lifestyle is basically the same. Is it possible to get myself out of this cycle without making major overhauls? What am I doing wrong?
You might be familiar with the term “lifestyle creep.” It’s the tendency to upgrade your day-to-day spending habits as you make more money, bit by bit. At first, these changes seem minor (buying organic instead of regular, moving to a slightly bigger apartment, getting your shirts pressed instead of ironing them yourself), but thanks to the hedonic treadmill, they’re tough to undo. “I could get used to this!” is a punch line, but it’s also the truth — you will.
This is not your issue, though. Instead, you’re experiencing the opposite phenomenon — let’s call it “inflation creep” — and it’s making all your usual expenses unaffordable. It’s sneaky and confusing and, unlike lifestyle creep, it’s happening to you, not because of your personal decisions. No wonder you’re stressed. Your day-to-day expenses are becoming prohibitive, even though you haven’t changed them.
Inflation creep and lifestyle creep are different beasts, but the solution to both is the same: You have to become more aware of your spending habits, and make tradeoffs if you want to afford the stuff you care about the most and still save money. More on that in a minute.
First, some context. For the past 20 years, U.S. inflation has generally hovered between 1 and 3 percent, which is typical for a healthy economy. By contrast, the past two years have brought inflation rates between 7 and 10 percent — triple the norm. For certain categories like groceries, consumer prices have increased even more (13.5 percent, as of August). Last November, lettuce cost almost 20 percent more than it did the previous year; egg prices were up almost 50 percent. That may seem wild (and it is), but these fluctuations are usually so insidious that you might not notice until the end of the month when suddenly, your budget doesn’t add up. Cardi B addressed it best: What the fuck?
So no, it’s not your imagination that it’s become harder to save, nor is it your fault. Your $5,000 raise might seem like a nice bump, but if you were making $73,000 before, $5,000 is a 6.8 percent raise — not even keeping pace with last year’s inflation. That’s why inflation creep is so destabilizing: Your money is worth less than it used to be, so you’re spending more of it just to get by, even though it seems like you should have enough.
There are three steps to manage this. The first is to get a handle on your emotional response to it (being stressed about money is no way to live; plus, people tend to make bad financial decisions under duress). The second is to figure out how to reduce your expenses in a simple way so that you can save more. And the third is to ask your employer for a bigger raise that is, at the very least, commensurate with the higher cost of living at this weird moment.
“To start, take a beat and try to understand what you’re really worried about,” says Aja Evans, licensed mental-health counselor in New York who specializes in financial well-being. “A lot of my clients have uncomfortable feelings about their money and believe that they should be ‘farther along’ or in a certain place financially, and inflation has exacerbated this.”
In my own life, I’ve found that financial stress around day-to-day expenses is like dust in the air — an ambient discomfort that stings your eyes and makes you cough, but is tough to actually grasp. Thrashing around only makes it worse, but still, you feel the urge to act.
“When we’re in a crisis, we tend to want to problem-solve immediately so we can alleviate our anxiety,” says Evans. “But in those moments, we usually just come up with short-term solutions, not long-term ones that integrate your values and well-being.” For example, I might see that lettuce is $6 at the grocery store, scoff with outrage, and walk away. That’s fine in the moment, but am I going to boycott salad for the foreseeable future? Instead, Evans says, bookmark the problem (groceries are taking up more of your budget) and come back to it when you’re in a more neutral headspace.
Your next step is to do an audit of your spending, going back at least one month but ideally up to three. Again, try to be nonjudgmental, says Evans. “It’s normal to think, ‘Oh, I can’t afford this, so I must be doing something wrong.’ But especially right now, a lot of what you can and can’t buy is tied to larger economic forces that have nothing to do with you.”
That doesn’t mean that you have no agency, though. “When you go back and look at all your spending in detail, most people find things that are easy to cut,” says Brendan Pheasant, a certified financial planner with Kahler Financial Group. “The low-hanging fruit is going to be the stuff that you don’t remember buying in the first place.”
Once you’ve sorted out where your money is going, you can figure out what’s meaningful to you. “When you look at your spending through the lens of what it brings to your life, it’s easier to cut out the stuff that means less,” says Pheasant. “It’s up to you what that is. Screw what everybody else thinks and their value judgments on it.”
Note that scrutinizing your spending does not mean wrestling with every penny. It means being mindful of buying stuff, services, and experiences that you truly enjoy. “We can’t control inflation or what it affects,” says Pheasant. “But we can control our reaction to it, even if it involves making very hard choices about what we want.”
You also have some sway over your paycheck, in that you can ask for a raise that’s on par with inflation (and the industry rate for someone with your job and experience). Your company may not say yes, but if you prepare carefully, you’ve got a good case.
Finally, remember that inflation creep affects all of us. Many people feel like they’re backsliding in their financial lives right now. So don’t be afraid to speak up about it with close friends and family, if you want — if anything, they might be relieved to hear that they’re not alone.
The Cut’s financial advice columnist Charlotte Cowles answers readers’ personal questions about personal finance. Email your money conundrums to mytwocents@nymag.com.
