Almost 3 in 4 Americans Say Their Pay Increase Still Isn't Keeping Up With Inflation

Inflation has been wreaking havoc on a lot of people's personal finances since 2021. And while things have improved to some degree, living costs remain elevated.

In fact, in December, annual inflation, as measured by the Consumer Price Index, rose 3.4%. It's not surprising, then, to learn that 40% of Americans were more stressed at the end of 2023 than they were in 2022, according to data from Allianz.

Now one thing that tends to help people keep up with inflation is a pay bump. Seniors on Social Security get an annual cost-of-living adjustment so they have a better chance of keeping up with inflation. And similarly, many companies give out annual cost-of-living raises so their employees can keep up with their bills as they rise.

But according to Allianz, 73% of Americans say that even after a pay increase, their income still isn't keeping up with inflation. And if that's the boat you're in, boosting your earnings with a second job may be your best and most effective solution.

It pays to turn to the gig economy

You could try to cut expenses if your most recent raise isn't enough to manage your bills. But a lot of your larger expenses may be things you can't reduce.

If it costs an average of $2,000 to rent a home where you live and you're only paying $1,500, you probably don't have much wiggle room on housing. And unless you live somewhere with great public transportation, giving up your car probably isn't an option, either.

As such, a more effective solution than cutting expenses may be to look into your options for getting a second job. That way, you can potentially not only keep up with your living expenses, but also, perhaps buy yourself some breathing room by boosting your savings account balance.

How to find the right side hustle

If you're convinced that a second job is the solution to your financial problems, then you'll want to find the right gig so that it's sustainable for as long as you need it to be. To do so:

• Set an income goal, either on a weekly or monthly basis.
• Research different gigs to see what the pay looks like. You may not be looking at an hourly rate so much as a per-project or variable rate, so keep that in mind.
• Think about how many hours a week you can manage to devote to your gig.
• Think about how much flexibility you need. You may want to favor a job you can do at your own pace, like sign up to be a grocery delivery driver, as opposed to being a server at a restaurant with preset weekly hours.
• Think about the hobbies you already have and see if any can be monetized, such as playing piano (you could teach others that instrument, or entertain at a fancy local restaurant or club for a few hours a couple nights a week).

It's not all that surprising to see that even workers who have gotten raises aren't able to keep up with rising living costs. A side hustle could be your ticket to managing your expenses with less stress. And if you find the right one, you may decide to keep at it even if you eventually snag a promotion at your main job that boosts your paycheck more substantially.