The Better Budgeting Podcast
The Better Budgeting Podcast is your go-to resource for mastering your finances without the stress. Hosted by Danielle Reese, this podcast breaks down budgeting, saving, and smart spending into simple, actionable steps. Whether you’re tackling debt, building wealth, or just looking to make your money work smarter, we’ve got expert insights, real-life success stories, and practical tips to help you take control of your financial future. Tune in and start making your budget work for you—without sacrificing the things you love!
The Better Budgeting Podcast
Episode 85: Breaking the Paycheck-to-Paycheck Cycle: Why It's Harder Now Than 5 Years Ago
Five years of coaching has shown me something alarming: getting out of debt and building savings is significantly harder now than in 2020. This isn't just perception – the numbers tell a powerful story of why so many feel financially stretched despite earning more than they did five years ago.
When COVID hit in 2020, stimulus checks and enhanced unemployment created a temporary cash flow that masked underlying financial issues. Fast forward to 2022, inflation skyrocketed to 8%, while income growth consistently failed to keep pace. The Consumer Price Index has outpaced wage increases every single year since 2020, creating a compounding deficit in personal finances. Most revealing? Consumer spending has increased by an average of 9% annually during this period – exceeding even the highest inflation rates.
Those small daily expenses that seemed harmless in 2020 now keep us trapped in financial cycles. That $6 daily coffee might not prevent homeownership, but at $1,440 per year, it contributes significantly to paycheck-to-paycheck living. Social media platforms and easy payment options like Afterpay have dramatically changed consumer behavior, making spending effortless while saving requires deliberate effort. Breaking free requires both tactical adjustments (examining every transaction) and mindset shifts (recognizing your worth and pursuing substantial income growth beyond standard 3% raises).
As a coach, I've seen more clients seeking personal loans, rate reductions, or even bankruptcy in the last 18 months than in the previous three years combined. The path to financial freedom in 2024 looks different than it did in 2020, but remains achievable with the right approach. Ready to break the cycle? Schedule a session through the link in the show notes – I'd love to help you create a personalized strategy for today's challenging financial landscape.
Danielle is a money coach helping those who have been trying to figure out their finances FINALLY create a clear plan so they don’t have to worry about waiting to refill their bank account the next payday.
She is the founder of The Financial Freedom Society on Facebook and her signature money coaching program, The Better Budgeting Playbook. You can sign up for her newsletter by clicking here.
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Hello and welcome to the Better Budgeting Podcast. I'm your host, danielle Reese. I'm a money coach and the founder of the Better Budgeting Playbook, and this is my one-on-one coaching program for women and couples who have been trying to figure out their finances, finally create a clear plan so they don't have to worry about waiting on payday anymore. I became a money coach in 2020 after paying off over $60,000 in debt, rekindling my marriage, becoming financially free and wanting others to experience the same. If you'd like to work with me, you can check out the link in the show notes there. Also, we have the Financial Freedom Society on Facebook. It's a free Facebook community focusing on debt payoff, saving strategies, budgeting and money mindset. You can find the link to that community in the show notes as well. Thanks so much for being here for this week's episode of the Better Budgeting Podcast. Oh man, I love this episode because I was asked last week by a client what have I seen over the last five years of coaching when it comes to finances? Is it this hard to get out of debt? Is it really hard to save? And it really got me thinking and I said I gotta, I gotta do a podcast episode. So here we are. Over the last five years, I have seen a tremendous change when it comes to finances personal finances and I will say that it is more difficult now to get out of debt than it was even five years ago, and this is from my perspective as a coach. I've coached over 100 clients. At this point, I think we're actually getting up to like 150, which is amazing. I've seen a lot of personal finances All right, and I will say that it is a lot harder to manage debt in today's day and age than even five years ago. Now, what happened five years ago? I started my business in August of 2020.
Speaker 1:Covid happened, right, and we've got, you know, for America at least this influx of cash that was coming into this economy with the stimulus checks right, and my husband was furloughed, so he was getting state unemployment, but then also like federal unemployment and many of you also were in that boat as well and like this just large amount of money was just flowing into the economy, at least for america. I know we've got a lot of listeners across the globe at this point, but for right now, what I see the most is that there isn't that influx of money anymore, right. Instead, what has happened is inflation has caught up to that and it is huge leaps and bounds. I did a little research here and the average US inflation rate from 2020 to 2025 is 4.1 to 4.6%. And then also it broke it down by year. So in 2020, 1.4. In 2021, 4.7. In 2022, 8%, 8%. Okay, what happened in 2022?
Speaker 1:Right, everything starts going back to quote unquote normal. Right, people are starting to catch up with the money that was dispersed throughout the United States and we financed things in 2020. We went on vacations, we added new debt, we added you know what I mean, and not even like credit card debt, but like, maybe when we bought a house, or maybe we went and bought a new car, we bought new things. You know what I mean and all of that kind of came to a head back in 2022, when everything again quote unquote went back to normal. Everybody's going back to work, everybody is, you know, doing the dang thing like 2019. In 2023, we've got 4.1 percent and around 2024, around 2.9 percent. Now, there was a transition there, you know, for our economy. As far as an administration political administration I'm not getting into that, I'm not political at all but there has been some changes due to change of office. Right point is the numbers are there to feel like you're not making as much progress anymore. A hundred percent. I agree with that feeling and thought process that you have going on right now.
Speaker 1:However, I'm going to share that it is not impossible to get out of debt. It is not impossible to save. It just takes a different path than it did five years ago. It takes different discipline and requirements of you to get it done, because it's not as easy anymore. It reminds me of when I was 22 and I lost 30 pounds and I did that over maybe a six or seven months span and it felt kind of easy. It was so much easier to meal plan and prepare and actually get to my goals. But now, as a 34 year old wife and mom of two, it's a lot harder. It is a lot harder. My life has changed. My lifestyle has changed. The hormones in my body have even changed. Right, it's no different. With your finances, you are probably making more money now than you did in 2020. You probably have more debt now than you did in 2020. And if you are really unique, you haven't added any new debt, right, you like didn't add new student loans. You didn't add a new car payment. You didn't add new credit card debt. You've just been paying a ton of interest over the last five years.
Speaker 1:The other part we have to address is that the income has not grown as much as inflation over the last five years either. So I looked into the Consumer Price Index, cpi. This is basically a measurement of measuring the price of consumer goods and services in the US, and when we put that up against how income has grown over the last five years, the consumer pricing for goods and services has outpaced, every single year, income wages, so increase of income wages, which is insane. And if you think about that from a very just, you know, macro level, if you take your income and you overspend your income every single month, year over year, over year, what happens? You run out of money quickly, actually the very first month, but you run out of money and then you end up going into debt. You're in a deficit every single month over year over year. And that is what has happened here with the consumer price index against income. Everything is going up cost-wise, but income is not pacing with it.
Speaker 1:So no wonder you and my clients are feeling that tension a bit more these days, because this has been compounded over the last five years now and it's coming to that head of like oh, we've actually stretched ourselves really thin at this point, like we were making it work. We were making it work, it was okay year three, year four, but year five, wow, it's getting a little bit more difficult to make things work, okay, so, from a fact standpoint and statistics standpoint, it makes sense that people are feeling stretched right now. Now, before we can go and blame all of our financial struggles on inflation and lack of income growth, we've got to look at what has spending looked like over the last five years. And here is where I come in. Okay, this is why coaching is so, so important, because these numbers, just they are probably not going to even make sense because you're like, I just feel so stretched, okay, but here's, here's the reality. Okay, over the last five years, on average, consumer spending has gone up 9%. All right, 2020 to 25, average 9% of consumer spending over the last five years. Now go back to those inflation stats that I gave you. There was only one year that was close to that, and that was 2022 at 8%. That means that, even though inflation has been increasing over the last five years.
Speaker 1:We, as consumers, have been spending more money over the last five years. Even if we don't have it, we've been spending more money. And what do you think that comes from? My theory is TikTok, instagram, facebook Reels all of this stuff that is happening that we have influenced our culture to buy more, spend more, right? You also have afterpay options. Affirm Klarna. Afterpay is actually a thing, right? It used to be in the 90s that like layaway program, but now it's so easily accessible, it's just like click. It has become much easier to spend money. Even think about it, like you just wave your phone up against the little credit card machine right At the grocery store and guess what, oh, would you like to pay this? You know, $100 grocery bill and four payments, yeah, sure, but then we get stuck in this rat wheel. It's become so easy to spend money, and that's why coaching is so important, because this is not just a mathematical problem, this is also a mindset problem.
Speaker 1:Okay, I saw this post the other day. I think it was like an actual picture, right, with some writing on it. It was talking about buying a coffee, but also trying to buy a house, and it was trying to like, make you feel like you buying your coffee is not the reason that you're not getting to a house, which okay, maybe right. But if we do a $6 coffee five days a week, so just a regular work week, obviously six times five that's $30 a week, okay. And then let's say we did by 48 weeks. Let's say you have four weeks of vacation a year and you know you're not getting coffee on those weeks. So $30 a week times 48 weeks within a year that's $1,440. If I dropped $1,440 in your bank account today, wouldn't you be so freaking joyful? I mean I would. I would definitely be so joyful. So, yes, that is not keeping you from maybe buying a house, but it is keeping you broke, from getting out of this financial cycle of living paycheck to paycheck.
Speaker 1:And if you are looking for a way to break this cycle of I have to outpace that inflation, my income, I'm trying to grow my income and I'm trying to get out of debt, we're going to start looking at that. $30 a week 30 times four, that's $120 a month in coffee. Right, like, maybe you really love your coffee, me I don't find coffee that enjoyable. All right, I'm not. I'm not trying to do that. Okay, but I have other things that I do that with right. I just started watercolor painting. Holy cow, that can get expensive fast, especially the paper. All right, we have to start looking at those tiny little things now.
Speaker 1:In 2020, we didn't have to we could go enjoy our $30 a week in coffee and it would be no problem whatsoever. But there is not enough income getting added every single year. So, rising right, and you might be getting a 2.1%, 2.5%, maybe even a 3% raise, but right now it's not outpacing inflation. So you're actually making more money, but you're spending more money on the basics and because of that, we have to start looking at these little tiny transactions all the time. That is how you're going to stop that cycle and it's not fun. It is not fun at all. I know it's not fun.
Speaker 1:I wanted the other day so bad to go to Starbucks and get a strawberry, icy, icy acai refresher. Yeah, that thing, the strawberry, not with the lemonade, with the water, but it's like $7 for a large. Like I'm sorry, but that's that's just gonna have to wait. Like I'm gonna have to find a dupe on Pinterest or on a reel or TikTok or something so I can make it at home, but $7. And meanwhile, like I gotta spend $3.15 every time I send my kid to school to go eat lunch there Like that's a whole day's worth of lunch for two kids. Cents every time I send my kid to school to go eat lunch there Like that's a whole day's worth of lunch for two kids and one drink and one drink.
Speaker 1:So we have to start rewiring our money mindset about these little tiny transactions. And there are some gurus out there and some financial experts out there that are like well, that's just a you know, such a scarcity mindset. But here's the thing, sis, like we are living paycheck to paycheck. We got to get out of this. We got to start looking at every single transaction to get out of this. And then we're going to start working on your abundance mindset and saying that I am worth an extra 10 grand a year, not this measly 3% raise. I am worth going to a new job and, instead of making a lateral move, making an upward move and making 25% more than my last job, I am worthy of these things. So then we start working on our abundance mindset with money because we've done the little work that needs to be done. We've done the building blocks, the little stepping stones so that we can get over here to this place and I know you can't even see me, I'm using my hands a lot in this conversation but we're going to get over here to a point of okay, I've taken care of all the little things and I feel very good about how I'm managing my money. Let's go grow it. Let's go figure out how to make more of it. Let's go figure out how to make my dreams come true. Let's go do the big thing.
Speaker 1:But right now you're stuck in that rat wheel and I'm not saying it's because of $30 coffees. It could be for anything, but it is likely keeping us stuck Because the $5 coffees, $6 coffees, whatever the $5 breakfast sandwiches, you know, the getting through the Target dollar bins and all this extra stuff that stuff does add up. It adds up and when we put it in perspective of what inflation looks like and what our income wages look like, there is a gap there and we are in the negative right now. And the only way for you to be able to control that is for you to control where your dollars are going and how you're spending them. If you wanna spend dollars on a coffee, fantastic. My next question to you would be what are you willing to forego in order to have that? There's no problem that you want your $6 coffee, but what else are you not gonna get? Because you can't afford all of them?
Speaker 1:And so many of you are in that space right now and you got to hear this hard truth and I hate that, but it is my duty as a financial coach to kind of give you a wide perspective of what has happened over the last five years of me being a money coach and understanding how finances have really impacted people. I mean, over the last 18 months, I will say that more people are getting personal loans, more people are calling credit card companies and asking for a reduced rate. More people are even going into bankruptcy, even with my guidance, because that might be the best option for them and it's never the option or straight out the gate. These are the options that we really look into and we evaluate for months before making that move. Okay, so over the last 18 months, we've done a lot more of that with my clients than I ever did in the three and a half years before that, and it's just the reality, because there was no guidance for those people in that 2020 era of all this extra money coming in, we've got to spend it to. You know, bump up the economy, because that's exactly what they told you to do, instead of saving the money or maybe paying off the debts and staying out of debt.
Speaker 1:So if you want to have a conversation with me about your finances and seeing how I can help you if this really resonated with you just schedule a session with me. I love talking with people. Find me on Facebook, send me an email, send me a message right here in the show notes. There's a little link there. Send me a message. It comes in an honest way. So if you have a question about your finances, I'm happy to answer it on the next podcast. Okay, thanks, I'm happy to answer it on the next podcast. Okay, thanks so much for listening to this week's episode and I'll talk to you again soon. Take care.