If you feel pressured when trying to meet the necessities of life, you are not alone. When inflation soared following the coronavirus pandemic, wages struggled to keep up. The result was more expensive necessities, such as food, housing, transportation and utilities, and less income to pay for it all.
However, in recent years inflation has slowed. But although prices are rising more slowly, they are still rising.
So what do the numbers say? Have wages finally caught up with inflation? And regardless of the data, how can you get more bang for your buck when the cost of living rises?
Let’s start with the good news: in the 12 months between February 2025 and February 2026, wages actually outpaced inflation. According to the Bureau of Labor Statistics (BLS), real average household income increased 1.4%, seasonally adjusted, during this period.
If these numbers don’t seem to be reflected in your budget, it’s likely because salaries have been approaching inflation in recent years.
The Federal Reserve aims to keep inflation at a rate of 2%. But after the pandemic, supply chain disruptions and changes in demand, among other factors, caused inflation to rise rapidly. A measure of inflation, the Consumer Price Index (CPI), rose to more than 9% in the 12 months ending June 2022.
Inflation has slowed since then; The current CPI as of February increased only 2.4% compared to the previous 12 months. But that doesn’t mean prices have gone down, it just means they haven’t risen as fast.
On the other side of the equation is wage growth.
Bankrate’s wage-inflation index data found that from January 2021 to August 2025, wages still lagged inflation by 1.2 percentage points. Previously, the gap between wages and inflation reached 4.8 percentage points in 2022, so things are going in the right direction for wage earners. However, the relatively flat growth in real wages (taking into account inflation) means bills may still look tight.
In short, real wage growth has remained broadly stable since inflation took off after the pandemic. Although real wage growth was positive last year, it is still “catching up” after falling behind several years ago.
When your bills seem to grow faster than your cost-of-living salary increases, frustration can arise. Unfortunately, the price of most things is out of your control. But that doesn’t mean you can’t stretch your budget.
Read more: This map compares the cost of living in each state.
If your salary isn’t keeping up with your cost of living, implement some of the following strategies to get a little more bang for your buck:
If you have money in a traditional savings account, inflation is quietly eating away at your balance. However, you can combat inflation by putting that money in a high-yield savings account (HYSA).
Since the best HYSAs currently earn up to 4% APY, the difference in interest earnings can be staggering. For example, with $10,000 in the bank, you’re looking at a difference of almost $400 in a single year.
Read more: How much can I earn in a year with $10,000 in a savings account? In addition to HYSAs, you can consider other places to protect your cash against inflation:
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Inflation-indexed bonds: In the United States, inflation-indexed bonds are called Treasury Inflation-Protected Securities or TIPS. The principal of a TIPS grows with inflation, meaning you receive an inflation-adjusted price when your bond matures.
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I bonuses: Available through the U.S. Treasury Department, Series I bonds bear a fixed rate of interest and a variable rate of interest. The fixed rate remains the same for the life of the bond, while the variable rate is linked to inflation and changes twice a year to coincide with changes in the Consumer Price Index for all Urban Consumers (CPI-U).
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Money Market Accounts: A money market account combines features of a checking and savings account, but they often pay higher rates than traditional savings accounts. Keep in mind that you may need a higher initial deposit to open one.
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CD: A certificate of deposit (CD) is a time deposit that earns fixed interest on your money for a set period. If you lock in a high interest rate and rates subsequently drop, you’ll benefit from higher earnings over the life of your CD. The trick? You can’t touch your balance (without penalty) until the CD matures.
Read more: How inflation affects savings: here is the interest rate you must exceed
Borrowing money isn’t free, and interest charges can eat into your savings and reduce any pay rise you get.
If you have high-interest debt, such as credit cards or personal loans, make paying it off a priority. There are a number of strategies you can use, from the debt snowball or avalanche method to debt consolidation or refinancing. The best way to get rid of your debt will depend on a few factors, including the amount, the interest rate, and your monthly cash flow.
Read more: Do you need a plan to pay off debt? Try this 7-step budget guide.
Cashing out is only one side of the equation. To fight inflation, you can also try increasing the amount of money coming in through your paycheck. Salary negotiation is just one way to do it.
If you feel that your income is insufficient at your current job, don’t hesitate to try to negotiate a raise. (Hint: If you didn’t negotiate your salary when you were hired, you’re probably underpaid.)
Start by doing some research on the average salary for your position. If you can find out how much colleagues in similar positions make, that will help too. Then, work on collecting your accomplishments (the more specific, the better) and practicing your speech.
If you have extra time and energy, consider starting a side hustle to earn extra money. Side jobs can be related to your day job, but they don’t have to be. In fact, if you have a hobby or passion that you enjoy doing and can monetize, your side hustle may not be anything like a job.
Common side jobs include freelance writing or editing, consulting, tutoring, and social media management. If you’re undecided about working from home, you could also consider things like driving for a ride-sharing company, dog walking, or grocery shopping and delivery.
Sometimes, despite your best efforts, a pay raise isn’t in the cards. If this seems to be an industry-wide phenomenon, you might consider making a career change. (Also, if you’re bored at your job and upward mobility is limited, that might be reason enough to change careers.)
If possible, focusing your career search on fast-growing industries could give you more earning power. Currently, some of those fast-growing industries include renewable energy, healthcare, and the information sector.
If you are in an area with a high cost of living, your entire paycheck may be consumed by rent, food, and other monthly needs. And while there are some things you can’t control when it comes to covering essential expenses, you usually have a say in where you live.
If you have the flexibility, moving to a more affordable area could significantly reduce your monthly bills. Whether that means working remotely at your current job, looking for new opportunities in a new city, or starting your own business, moving could save you thousands (or more) per year. Just be sure to consider moving costs when calculating these potential savings.
Read more: How to Save Money on Groceries: 13 Ways to Stretch Your Food Budget