It feels like every headline today says, “Everything is so expensive. How can anyone afford to live anymore?” Is it really that expensive to live? There are some things that are more expensive. For some reason cars are ridiculously expensive today. Healthcare is ridiculous. And, going out to a restaurant since the pandemic is bonkers! But that doesn’t mean everything across the board is more expensive to live.
Air travel is the same if not less. Many electronics are more affordable. Clothing options and prices have become more accessible. And, salaries have increased. An average job 20 years ago would have paid $12 an hour and today that same job is paying $15-$17 an hour if not more. But, unfortunately those details don’t show up in the narrative.
What About Rent / Housing Costs?
In general, houses are more expensive but salaries have also increased. We purchased our house for $180K in 2006 and put $20K. Today our house would cost $480K, so at first glance it looks like cost of living is on the rise, but if salaries are also rising during that time it means the comparison isn’t apples to apples.
If a household was making $100K in 2006 and living off $80K so that that saved $10K for retirement and $10K for a house, it would have taken them 2-years for the down payment. But if the salary is $150K in 2026 and still living off $80K, it leaves $70K a year for retirement, cost of living, and a down payment. Just because housing increases 150% doesn’t mean salaries need to increase 150%.
Even when I look and cost of rent at different locations in Texas. The prices for 1-2 bedroom apartments in Texas haven’t changed that much over the last 20-years. Yes, there are some places that rent for significantly higher rents but those locations typically come with more amenities.
Choices Change the Math
Childcare is another good example. It’s often presented as an unavoidable cost of raising children. For some families, paid childcare really is necessary. For others, one parent staying home is an option also. Of course, staying home means giving up potential wages, benefits, and career progression.
But the comparison should use take-home pay, not gross salary. Taxes, childcare fees, commuting, work clothing, convenience meals, and other work-related costs all belong in the calculation. Depending on the household, staying home can cost money, break even, or improve cash flow.
And, today there are more government funded programs for children that are available today that weren’t available 20-years ago, so that would also make life more affordable today than 20-years ago.
Why Does the Media Make Life Sound Bleak?
Bad news is simple to communicate. A headline about rising prices is emotionally immediate. A careful explanation about wages, disposable income, changing household budgets, and regional differences is harder to fit into a sound bite.
Political voices also have incentives to highlight economic frustration, especially when criticizing the people currently in power. News organizations have incentives to cover stories that command attention. Neither incentive proves deliberate deception. But both should make us cautious when a dramatic number arrives without context.
A Better Question
Instead of asking only, “Is everything more expensive?” I’d rather ask, “After earning, spending, and saving, what opportunities does a household actually have today compared with 20 years ago?” Where are you spending money? There are significantly more creative ways to spend money today than 20 years ago, therefore, we have to ask, “Where is our money going?”
That question won’t produce one neat answer for every American. But it will produce a more useful conversation. We can acknowledge genuine financial pressure without assuming that every higher price means a lower standard of living. And we can recognize the power of wise choices without pretending that every family has the same choices available.