Am I Really Getting Poorer Each Year With Raises Below Inflation?

A Reddit user is very concerned about his buying power, and with good reason. The poster shared that his job is not providing him with salary increases that are keeping pace with inflation in recent years. As a result, he’s worried that he is getting a de facto pay cut and is growing poorer over time.

So, is the original poster (OP) right that he’s losing around because of his small salary bumps or when he does not get a raise at all? And, if so, what should he do about it.

A too-small raise will cause you to lose buying power

Other commentators were quick to point out that the Redditor in this case is not wrong. He is losing ground because when your salary increase is lower than the rate of inflation, you do effectively lose buying power. If your costs rise by 2.9%, which was the annual inflation rate in 2024, and your salary goes up by 1% or not at all, you now can’t buy nearly as much with your money as you could in the past. 

Losing buying power makes it harder for you to make ends meet. You won’t have as much money left over after your discretionary spending is done, so you may not have as much to save. Or, if you prioritize saving first, which is usually the smarter financial move, then you may find it hard to cover the bills with what’s left and you are going to have to make some financial sacrifices or could risk ending up in credit card debt because you are buying more than your current income will allow.

What to do if you are getting raises that don’t keep pace with inflation

Multiple Reddit users provided some suggestions regarding what the OP could do about the fact that he is effectively getting poorer since his raises aren’t giving him enough money to maintain his spending at his past levels.  The gist of all the suggestions, though, came down to the fact that the poster needs to find a way to earn more money.

Some commentors suggested that the OP should work on his negotiating skills in order to try to boost his pay. He could try to negotiate a better salary at his current job during an annual performance review, or simply by asking for a meeting with his boss and coming prepared with data on his past successes as well as on salaries for people in his position.

Other posters suggested that the OP may want to improve his skills in order to find a better job that does keep pace with inflation, while still others suggested that the poster think about working some extra hours at a side hustle in order to better make ends meet.

All of these techniques could be good ones worth trying, since the poster needs to either improve his income or cut spending, given the fact that he simply isn’t getting the raises he should during these periods of high inflation. The poster may also want to talk with a financial advisor to explore opportunities to better use the funds he does have available to accomplish his goals while living within his means.