I Got a Real Raise This Year and Still Feel Broke. What's Going On?

Speaker A00:00:00

You got a raise this year, a number on paper. That should feel like progress. So why does your bank account feel just as tight as it did last year?Well, today let's find out where the raise actually went and make sure the next one doesn't disappear the same way. Now, I'm going to tell you right now, this isn't just a feeling. There are two real specific reasons this is happening to a lot of people.But the best part of that is both of these are fixable once you can actually see them.So stay with me today and let's track down where that money really went and make sure you stay till the end, because I have a big announcement to make at the end of the show. Hello and welcome to Financially Confident Christian. My name is Ralph Estep Jr. And I just want to thank you for joining me today.Today is one of those topics that hits close to home for so many of us, and that's why a real raise can still leave you feeling just as broke as before. And we got a great listener question today. Listener asks, where did the extra money actually go?And then he takes a little deeper and says, is this normal? RALPH and how do I make sure my next raise actually helps? And I feel for him in this one.It's that feeling of getting good news on paper and still feeling that same financial squeeze. It's confusing and and yes, it's honestly a little discouraging.And if you've got a question for the show, I would love to answer your question on the show. You can reach me by going to FinanciallyConfidentChristian.com/question.We'll put a link in the show notes, but again, that's financiallyconfidentchristian.com/question. Let's get right to today's listener question.Listener writes this hi, Ralph, I got a genuinely solid raise at work this year, something I worked hard for and was really excited about. But a few months in, I'm looking at my bank account and I honestly don't feel any different than I did before the race happened.RALPH I haven't made any huge purchases or done anything I'd call reckless. Just groceries, gas and the regular life all feel more expensive than they used to. So maybe that's what's eaten on to it.But I also wonder if I've just quietly let my spending creep up without really noticing. I don't know if this is normal or if it's something I'm doing wrong.RALPH how do I figure out where this raise actually went and how do I make sure the next one doesn't disappear the same way. Thank you. Well, thank you for your question. What a great question to start off today. And I'm going to tell you right from the jump.In my view, there are two specific culprits that are going on here. One of them is inflation that's eating the rays on paper.And the listener kind of alluded to the other one, and that's lifestyle creep eating what's left. But as I said earlier, the best part of that is both of these are fixable.So we're going to walk through how to find out exactly where the money went on today's show. So here's the first thing I want to encourage you to do if you find yourself in this same situation.You've got to calculate your actual real raise, not the percentage on paper. It's really easy to say, well, I got a 10% raise, that's great.But wage growth this year has been running close to and at times behind the actual inflation rate. Say that word 10 times. It's a tough one to get out sometimes. It's a tough one to deal with, too.And so that race sounds solid on paper, but can end up being close to flat or even a real pay cut once inflation is factored in.So one of the things I would encourage you to do is compare your race percentage directly against this year's inflation rate to see your true real increase. This single calculation often explains most of the where did it go?Feeling right away, because in the end, a 5% raise during a year of similar inflation isn't really a race. It's just treading water. But then once you get past that, you say, well, Ralph, this is a real raise.When I look at my raised percentage and I look at inflation, I'm still ahead. Then you've got to track the specific categories that, that have gotten more expensive.These are the real things you're buying on a weekly basis, things like groceries and gas and those everyday essentials. The truth is, look around, those things have gotten more expensive this year for most people.One of the ways you can see that is if you pull a few months of bank statements and compare this year's essential spending against last year's. This is one of the tools I tell a lot of people to do.Go look at your bank statement from last August and look at your bank statement from this August and then you'll see exactly how much things are costing more. And then you can start to determine how much of the raise was already spoken for before the money ever became extra money.When you name that real cost. The increase removes the vague, uneasy feeling and replaces it with a clear number. Because in the end, your raise didn't disappear.A big piece of it went straight to the same bills, just at higher prices. Now, I want to get into something you mentioned in your question, and that's that creep, and that creep is called lifestyle creep.Because I want you to look for quiet lifestyle creeps separately from inflation after you've ruled out inflation. And listen, inflation is a real thing. Prices are going up.I want you to look for spending that increase simply because there was more room in the budget.All of us have been here, or maybe, maybe you haven't been here, but you'll get this situation sometimes and you notice that you're spending a little bit more on groceries. Maybe you get some upgrades, maybe you're ordering more takeout, it's easier.You know, it's, I had a rough day at work, so I'm just going to order takeout. Or maybe it's those subscriptions.Maybe you've added one or two of those and they don't feel like they're big things as you're doing them, but they add up quietly. Now, I'm not telling you to do this about guilt. I want you to see clearly what inflation and what actual new spending looks like.Because if we're going to be honest with each other, most people have both of these. And when you know that split, it changes what to actually fix. Because not every dollar disappeared to prices. Some of it disappeared to comfort.You didn't plan for. And then you mentioned in your question, you said, ralph, how do I make this better for the next time?It sounds like this raise has already come and gone. One of the best things you can do is give the next raise a job before it arrives. I'm in the midst of writing a book called the Dollar Job Framework.I'm a firm believer that you've got to give every single dollar a job or it'll find a job on its own. So if you've got a raise that's down the road, one of the best things you can do is decide in advance where the future raise will go. Plan ahead.Are you going to put more in savings? Are you going to be strategic in paying off debts? Is there a specific goal? Maybe you want to save for a home or a new car?Well, if you plan those things in advance before it hits the paycheck, you will do a better job with that. Because like I said a few minutes ago, money without an assignment tends to quietly Blend into everyday spending. You don't even realize it's going.One of the key ways you can do this, and I love this idea, is automate a portion of any future raise directly into savings or into extra debt payments. One of the things that a lot of people do is when they get a raise, they automatically increase their retirement contribution.It's a great thing to do. This single decision when you make it ahead of time is what actually makes a raise feel different.Because a raise without a job to do is a raise that quietly disappears. And raise your hand if you felt that quietly disappearing. Here's one of the things I want to make as a takeaway for today.You got to revisit this every time your income changes. This isn't some one time quick fix. If you're like most people, your income is going to increase over time. So you've got to build a habit.This is a habit that you've got to repeat every future raise or every time you get a bonus. We've already talked about bonuses today, but bonuses are fertile ground for this as well.Each time the income increases, run that same real calculation before deciding how to use it.Because you might run that calculation and realize, yeah, I got a raise at work, but Ralph, everything costs more, so I actually didn't get a raise at all. So I'm going to encourage you to build a pattern where income growth actually translates into visible progress over time.Because here's the thing I tell people every day, those small consistent decisions here compound, and they compound significantly over career. So do this once and you'll feel better this year. If you do it every time, you'll feel better for the rest of your career.And that's what we're really building, a long term success strategy. But I also feel something.Well, for you today, there's a real discouragement in working hard in earning something you're proud of and still feeling like nothing actually changed. And that confusion is honest. That confusion you felt today is honest. And it doesn't mean you did anything wrong.It means the money had no destination before it arrived. And here's what our faith promises us. It promises us that wisdom and intentionality. I love that word, intentionality.You hear it on the show all the time.But faith promises us that that use of wisdom and intentionality, applied even to ordinary things like a raise, are exactly the kind of faithful stewardship that God honors. Faith doesn't promise us that every raise will feel immediate relief. Sometimes the raises are just to keep up with what's going around us.And it doesn't promise us that prices are going to slow down to match your paycheck.I love what Proverbs 21:20 says, and we'll get to our Bible verse in a few minutes, but it says the wise have wealth and Lux, but fools spend whatever they get. Now, if you've spent money because you've had a raise, I'm not calling you a fool. I'm not saying this isn't foolishness.It's about giving the next increase real direction. It's living in that intentional stewardship. It's not about more income. It's usually what changes how a race feel.When you be intentional about your life with that, that small shift is available to you starting with the next very paycheck. And in the end, the raise wasn't wasted. It just needed a destination before it arrived.So right now, if you're feeling confused, that doesn't mean you did anything wrong. It means the money needed a plan. So understand the real numbers and replace that vague frustration with a clear next step.And then your next raise can actually feel different starting today. So here's your win for today.If you're in this same situation, I want you to calculate your real raise by comparing your percentage increase against this year's inflation. Right now, you might not be happy with the results, but it's the reality on the ground.And like I said earlier, pull a few months of statements and then take a look at what essential categories have gotten more expensive.Because once you know the real numbers, you'll get out of that fog and you replace that vague frustration with a clear picture of exactly where the money went. And when you know where your money's going, then. Then you can manage it better. Well, let's get to our Bible verse today.I've already read it, but we're going to read it again. It's Proverbs, chapter 21, verse 20. It says the. Well, the wise have wealth and luxury, but fools spend whatever they get.And hear me clearly, I'm not calling anybody a fool. But what I believe this verse points to is intentional direction of our resources, not simply having more of them, not simply getting more money.If you've got a raise without a plan, it tends to just blend into everyday spending. You don't even realize where the money went. But when you give your future income a specific job to do, that is using wisdom and practice.Well, let's pray together. And then I got a special announcement for you. Heavenly Father, I want to thank you for this listener's hard work. And the raise he earned this year.And I just asked, Lord that you would give him clarity as he traces exactly where this year's raise actually went.Replace that discouragement with clear, workable plans for future income changes, Lord, and help him to give every future real increase purpose and direction before it even arrives. Lord, I ask that you will provide for his family even as all of us are seeing prices continuing to rise around us.And Lord, bless His diligence in wanting to understand and steward this well, Lord, help us all to make better decisions with our money. And we ask this in Jesus name. Amen. Again, a raise can feel invisible when inflation quietly erodes it.Net lifestyle creep is not the kind of creep we want to have around. So calculate the real raise, track those real cost increases and give that next raise a specific job before it arrives.That's what actually makes future income feel different. And if you've got a question for the show, I would love to hear your voice.You can go to financiallyconfidentchristian.com/voicemail we'll put a link in the show notes, but again, that's financiallyconfidentchristian.com/voicemail now, I teased at the beginning, I've got a bit of an announcement to make. So before I go, I have something new to tell you about and this is pretty exciting. I'm pretty excited about this.Starting on Monday, August 31, this show is going to become a brand new show called Becoming Financially Confident. It's going to be live every single weekday, Monday through Friday at 11:30am Eastern. And here's the best part. It's going to be a full hour.Me and a co host, two voices. Not a lecture anymore. We're going to talk about real bills. We're going to talk about real numbers. We're not going to talk about jargon.We certainly aren't going to talk about shame. And here's the best part of the show. Live chat is going to be part of it. You get your questions answered right on the air.Now if you don't, if you're unable to catch it live, that's okay. The podcast isn't going anywhere. The live show is where we go deeper in real time. And if 11:30 doesn't work for you, don't, don't worry about it.Yes, we're going to go live at 11:30 Eastern, but then the whole show's going to get released as a podcast episode later that day. So you can be there with us live or you can catch it on your drive home again. It starts Monday, August 31st at 11:30am Eastern.And I would love to see you there. We'll have more information about that coming soon. So thank you so much for joining me today.I want to encourage you, as I always do, stay financially savvy. May God bless you. And you have a truly great day today.