Though wages went up, workers didn’t actually get ahead.
- Though workers saw their pay go up in 2021, the rate of inflation outpaced wage growth.
- Here’s how workers can stretch their paychecks at a time when things are costing more.
It’s no secret that inflation is making living costs much harder to afford these days. Consumers are spending extra at the supermarket, the pump, and just about everywhere. And their paychecks aren’t helping them keep up.
In 2021, wages rose about 4.7% from the previous year, according to the U.S. Labor Department. But in December, the Consumer Price Index, which measures the cost of consumer goods, rose 7% from a year prior. All told, that amounts to a pay cut of roughly 2.4% as per the Labor Department’s seasonally adjusted data. And it’s leaving workers in a tough spot.
If your paycheck isn’t doing a great job of covering your expenses these days, there are some steps you can take to stretch it further. Here are some to consider immediately — before you land in debt or wind up having to dip into your savings to cover your basic bills.
1. Seek out supermarket deals
Those grocery store circulars that tend to clutter people’s mailboxes? You can access many of them online these days. Before you shop for food, plan out your meals for the week and make a list of the ingredients you’ll need for them. Then, compare prices at local stores to see where you can snag the best deals. Though grocery prices are up right now, if you manage to score a key item while it’s on sale, that could help compensate.
2. Stock up on discount store apparel or seek out hand-me-downs
The cost of apparel is up, and if you have children who need new clothes, that could be a burden. That’s why now’s the time to throw brand preferences out the window and seek out the cheapest options around, such as the items you might find at your nearby discount store. Children have a tendency to outgrow clothing quickly, so there’s generally no sense in sinking a lot of money into those items.
Better yet, if you know people with older children, don’t be shy about asking for hand-me-downs. If someone you know is doing a clothing purge, they may be more than happy to pass along the items they no longer need.
3. Drive more strategically
You may be used to hopping in your car and heading out on an errand run whenever it’s convenient. But given the cost of gas these days, you may want to take a more strategic approach to driving. Rather than randomly hitting the road, figure out the different places you need to drive to each week and map out your most fuel-efficient route. That could mean stopping at the bank on the way home from work, even if that’s less ideal for your schedule.
It’s unfortunate that inflation has rendered an otherwise impressive level of wage growth ineffective. The good news is that rampant inflation won’t be with us forever. And if you’re willing to make some adjustments to your spending and lifestyle, you can ride out this wave of higher living costs without damaging your finances in the process.
Top credit card wipes out interest into 2023
If you have credit card debt, transferring it to this top balance transfer card secures you a 0% intro APR into 2023! Plus, you’ll pay no annual fee. Those are just a few reasons why our experts rate this card as a top pick to help get control of your debt. Read The Ascent’s full review for free and apply in just 2 minutes.