Inflation rates have skyrocketed, and the government reports that overall consumer spending increased by 1.8% in January. Food costs have jumped 10% since last year, and energy costs 8.7%, while overall inflation is at 6.4% according to the Bureau of Labor Statistics. Wages have increased 5% on average—but is that actually enough to get by?
Fast Company spoke with one member of each generation to get an understanding how they are making their budgets work in the face of inflation. And on the whole, everyone identified one key factor that was helping them survive: privilege. This varied from help with a down payment on a house, to a high paying job, a spouse, or being able to draw on social security at just the right moment.
However, our respondents pointed out that not everyone has this kind of privilege today, and it’s unsustainable to have a system where your ability to survive depends on luck. Here, their stories:
The graduate
Kayla White, 23
Location: Arlington, Virginia
Occupation: Account executive, Amazon Advertising
Income: $102,000 (base) + $30,000 (commission)
Expenses: $33,000
My story: I graduated from the University of Virginia in May. I actually started off in community college, which I’m a huge proponent of, because that meant I only graduated with $9,000 in debt. I double majored in English and African American studies. I’m also a proponent of majoring in what you love—most people don’t end up working in their majors. I’m in sales tech.
I realize I’m really lucky to have the salary I do, and that’s not representative of Gen Z. I’m also lucky in that I was gifted a small car. I work from home most days, so I don’t have to pay for my car or pay much for doggie day care, which can be really expensive. In college, I had a credit card-debt problem, so I try to be very aware of lifestyle creep. I tell myself I only earn $65,000 a year and I need to live below that. Everything else goes into my 401(k), ROTH, and investment accounts.
Rent is about $2,100. I spend about $300 a month on food, $100 of it on groceries. I don’t let myself spend above that, but the grocery bags have been getting smaller and smaller. I’ve given up on eggs. I’m a big fan of cash-back websites like Rakuten, and I take advantage of introductory fees on meal kits. I’ve had to splurge a couple of times ($200-$300) to build up a professional wardrobe. I also spend about $3,000 a year on my dog including medication, vet visits, food, and boarding.
I used to use an Excel spreadsheet. I used to do no-spend days and no-spend weeks—and then go crazy and blow the whole budget on the last day. These days, I use Mint. I make it a point to figure out my basic needs, what’s important to me to splurge on (for me, it’s my apartment, I love it) and cut back on everything else.
The working woman
“Susan,” 39
Location: Midsized east coast city
Occupation: Director of fundraising at a nonprofit
Income: $92,000
Expenses: $50,000
My story: I was born in the U.S., but lived internationally. I got my PhD in the humanities, but didn’t get a full tenure-track job, so I pivoted to the nonprofit world. I’m extremely lucky to have help with a down payment for my house. I feel extremely lucky in many ways, but extremely vulnerable in other ways. Because I was abroad and also did a PhD, I have very little social security that I’ll be able to draw upon.
When I started full time at the nonprofit, I felt like I was rich—I was going to buy diamonds and a pony. Instead, I can barely keep afloat. I put around $15,000 of my salary in my 401(k) pretax (I get an 8% match). I have to pay $600 a month for student debt. My mortgage is $1,815. My utilities have gone from $150 to about $210 a month, and internet is $85. I try to limit myself to $100 a week for groceries and household supplies—it’s now $125. I have three pets and they all have illnesses, which gets expensive. I spend $100 a month on medications for them, and doggie day care is my second biggest expense after my mortgage. With inflation, doggie day care has gone up from $750 for a 20-day pass to $1050. I spend $185 a month for Orange Theory, but I think it’s worth it because it helps me exercise. I should have $500 a month left over, but somehow a vet bill or a car repair comes around and it seems to disappear. It took me two years to pay a $5,000 emergency vet bill.
Maybe I should drop my 401(k), but I’m almost 40 and I don’t have much in the way of retirement. If you’d told me as a PhD student that I’d be earning this much and barely making it, I would have said, “Give me the woman’s spreadsheet, she’s gotta be doing something wrong!” I read budgeting tips and I feel like I’m doing something wrong, but I don’t go out to eat, I don’t even really go out. Am I not supposed to have pets?
This even impacts who I date—I don’t feel like I can be with someone who has a huge amount of debt. I have a side gig as a novelist—I’m hoping my book will sell soon and give me some breathing room. I have a friend in France who has similar ambitions. She works 15 hours a week in a café. The government takes care of her health and she doesn’t have debt—we have the same goals, but our lives are radically different. I’d be on the street if I did what she did.
The family man
Mike, 43
Location: Lawrenceville, New Jersey
Occupation: Engineer
Income: $150,000 + $100,000 (wife’s income)
Expenses: $72,000
My story: I got married young and have three kids, the oldest of whom is in college. My wife and I were the first in our family to go to college—I didn’t have family help and graduated with $80,000 in debt. It was important to us to make sure our kids weren’t in the same situation.
I’ve been lucky in that I have a good job, so that inflation hasn’t hit us too badly. Our largest expense is food. We’re all into theater, so we’re big on takeout, because usually someone will be at rehearsal. We spend about $2000 to $3000 a month on it. I can really see inflation there. When I went shopping it used to be $100, now it’s $150 or $160 per week. Our mortgage is $2000 a month. Cars come to about $500 a month, and utilities and water about $300 a month.
We put about $1000 a month towards retirement. Right now, all of our extra is going towards tuition and our children’s 529s. Both my wife and I are on upward trajectories so I’m not too worried about tuition. We use an excel spreadsheet that I update: I know how much my paycheck is going to be every two weeks and almost all of the bills are paid out automatically.
My advice to anyone with college-age kids is to have a conversation with them about what their financial picture will look like based on their school’s tuition and the city they live in. It’s a weird conversation to have with a seventeen-year-old who is just thinking about college, but it’s hard to have an understanding of your expenses in ten years (I’m not even sure I have that now!). But it’s really important. The amount of debt you have will impact how much you have to live on and where you can live.
The retirees
“Grace and Micah,” 72 and 71
Location: Ann Arbor, Michigan
Occupation: Retired
Income: $92,000
Expenses: $65,000
Our story: Grace retired in 2012 and Micah in 2016. We’d both worked at the University of Michigan, Ann Arbor. Grace had worked there since her 20s so she got full health benefits. The University of Michigan also gave us a double match for putting 5% into retirement. We wanted to postpone drawing upon social security until we turned 70 so we could get the maximum amount. We had some frugal years until 2021, when we were living below $40,000, funded by our retirement accounts which gave us about $30,000 and our savings.
We got very lucky. We built a house and paid off the mortgage with an inheritance before we retired, and were able to draw on social security right as inflation started getting high. It added $60,000 to our income. We worry about what happens to people in physically demanding jobs if they raise the social security age—it won’t be viable for a lot of people.
We have about $20,000 in fixed expenses including house taxes and car, house, and health insurance. We spend a lot on food and household supplies—about $10,000 a year. We go to the farmer’s market and buy organic. Grace bakes bread. We’re also lucky in that we don’t eat a lot of meat or eggs (foods that have been impacted by inflation). We have five grandchildren and we want to support their college educations, so now that we have extra money, we set aside $30,000 to add to their 529s. We don’t spend much on clothes, but the rest is for medications, dental work, appliances, and visits to our daughter in Chicago.
This leaves us with quite a bit of discretionary income. We upped our charitable contributions, and now we have extra money for projects like fixing the house and hiring extra help for tasks we can’t do by ourselves like washing windows.
We keep track of our expenses using Excel. Micah updates it every day. Having our budget down to the $10 level helps us understand our whole financial picture.
Recognize your brand's excellence by applying to this year's Brands That Matters Awards before the early-rate deadline, May 3.
