Most Workers Say Their Raises Aren’t Keeping Up With the Cost of Living

Here are three easy ways to make your paycheck stretch further.

Getting a raise is ideally supposed to make your budget a little less tight. But for many workers, any extra income gets quickly swallowed up by rent, grocery bills, insurance premiums and other everyday expenses that have climbed sharply the past few years.

In a new survey from job search site Monster, 93% of workers say their wages haven’t kept up with the cost of living. Although inflation has cooled since its 2022 peak, prices remain well above where they were before the pandemic, leaving workers to feel like a raise really isn’t a raise.

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Feeling financially squeezed has consequences beyond monthly budgets. For many workers, it’s reshaping how they save, spend and even make career decisions.

Nearly 85% of workers surveyed say they’ve withdrawn money from their savings to cover everyday expenses, according to Monster, including 42% who say they’ve used a significant portion of what they set aside. That savings cushion can be especially important for households with little room in their budget. Almost a quarter of U.S. households are estimated to live paycheck to paycheck, and tapping those funds can make it harder to handle the next unexpected expense.

People are also making other tradeoffs to balance tight budgets. About 60% say they’ve cut back on nonessential spending, 38% report relying more than before on credit cards or loans, and 34% have reduced their retirement contributions. While those moves can help free up cash in the short term, they can also make it harder to reach longer-term financial goals like paying down debt or saving for retirement.

After a raise, “many workers see a larger paycheck, but what ultimately matters is purchasing power,” economist Scott Beaulier tells Money. “If housing, insurance, groceries, childcare and other necessities have increased faster than wages, people can legitimately feel like they’re falling behind despite earning more.”

Economists define purchasing power as how much your income can actually buy. Beaulier says people tend to notice increases in recurring bills more than occasional purchases.

“Those are the expenses people encounter every month, so they shape perceptions of financial well-being,” he adds.

How to stretch your paycheck when costs keep rising

Making a paycheck go further isn’t just about spending less — it’s about being strategic with whatever money is coming in. Financial experts say that often means looking beyond small spending cuts and focusing on the expenses that have the greatest effect on your budget.

Start with your biggest expense

When money feels tight, it can be tempting to focus on minor purchases you can eliminate. But cutting a couple bucks here and there may not make much of a difference if your large monthly bills continue to go up.

“People often spend a great deal of energy trying to save a few dollars on coffee while overlooking much larger opportunities to refinance debt, shop insurance policies, renegotiate internet or cell phone plans, or rethink vehicle and housing costs,” Beaulier says. “The old idiom ‘penny wise and pound foolish’ is quite real when it comes to our personal finances.”

That doesn’t mean small savings don’t matter. But reviewing your largest recurring expense can often create more room in your budget. From there, move on to the smaller, routine expenses that repeat every month. Is there a streaming subscription you don’t use anymore that you can cancel? Did your internet bill go up and you didn’t even realize? Is it finally time to kick your adult child off the phone plan?

A few dollars saved here and there won’t completely fix a gap between income and rising costs, but making consistent changes to recurring expenses can give your paycheck more room to work.

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Take advantage of benefits you’re already earning

Your paycheck is only one part of your total compensation package. Employer benefits can help lower costs or free up money in your budget, but many workers don’t take full advantage of what’s available. For example, 72% of private-sector workers had access to an employer-sponsored retirement plan in 2025, but only 53% participated.

Start by reviewing what your employer offers, including retirement plans, health savings accounts (HSAs), flexible spending accounts (FSAs), commuter benefits, tuition assistance and other workplace perks. For example, if your employer offers child care subsidies, it could help offset one of your biggest monthly bills. Commuter benefits can reduce what you spend getting to and from work, while free or subsidized meals at the office can lower your food costs.

These benefits can be especially valuable when everyday costs are rising and you don’t feel like you have enough room to save. Taking advantage of tax-advantaged accounts and other employer-sponsored benefits can reduce out-of-pocket expenses and help stretch your overall salary — even if your paycheck hasn’t grown as much as you’d hoped.

Invest in yourself

Once you’ve optimized your recurring bills and eliminated unnecessary expenses, the next step may be looking for ways to grow your income.

“Every budget has a floor,” Beaulier says. “There is only so much you can realistically cut before reductions begin to affect your quality of life.”

According to the Bureau of Labor Statistics, about 5.2% of employed Americans held more than one job in June, underscoring how many workers are looking beyond their primary paycheck to keep up. But earning more doesn’t always have to mean simply adding another job.

“One overlooked strategy is investing in your own human capital,” he says. “Learning a new skill, earning a certification or developing expertise in an area that’s in demand can produce returns that far exceed what you can save through coupon clipping or minor budget adjustments.”

The idea is to focus not only on reducing expenses but also on your ability to earn more over time. A new skill or credential on your resume won’t necessarily lead to an immediate raise, but building expertise in areas employers value can create more opportunities for career growth and higher pay.

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