The Real Cost of Living: You Can't Budget Your Way Out of Low Pay

Someone posted anonymously in a group I’m in recently about adding a financial literacy course as a benefit to their Executive Assistant pool at work, as several have expressed that they are stretched thin financially. They were requesting ideas of how to put something in place, or ideas on what has worked in the past.

This idea that you can budget yourself into financial stability when your employer hasn’t kept up with inflation isn’t new, but I have seen it one too many times to not speak about it. The average salary of an Executive Assistant in the United States falls between $59,362 and $75,845. Canadian salaries are similar, a little lower due to universal healthcare. I know that we have a global community, and that salaries will be different in other areas, but I’d be willing to bet that these are the higher end of the average for most countries, due to the cost of living. It is worth noting that I do see things through a North American lens, so I try and be cognizant of that. 

Working from a place of, you live in an average cost-of-living city in a state with no income tax, you could expect to bring home $51,237 or about $4,270 per month on a salary of $65,000. Now, imagine inflation goes to 8%. Your employer rolls back remote work, so now you’re back to commuting and spending several hundred dollars in gas. You are no longer able to work flexibly, so you will need to pay for daycare.

Let's walk through this scenario. You now have to commute to work, which means additional fuel costs, and you will have to pay for daycare for your hypothetical 18-month-old child. Let's add these costs to your existing expenses.

Additional Costs:

Gas: The cost can vary greatly depending on the distance and traffic, but let's say you spend an additional $150/month on gas due to the commute.

Daycare: The cost of daycare can range greatly, but let's take an average cost of $800/month for a full-time daycare center in a mid-range cost of living city. I’m out of touch with daycare costs, and I’d be willing to wager this is the low end.

So, your monthly expenses now would be:

$3,190 (Previous Expenses) + $150 (Gas) + $800 (Daycare) = $4,140

So, your monthly after-tax income is $4,270, and your monthly expenses are now around $4,140, which leaves you with a small surplus of about $130 each month.

Now, let's also consider the impact of an 8% inflation rate on your income. As calculated in the previous example, your $65,000 salary would effectively have the purchasing power of $60,185.19 after a year with 8% inflation. This would effectively decrease your monthly after-tax income to approximately $3,954.

With the new inflation-adjusted income, your monthly surplus would turn into a deficit. Your inflation-adjusted income is $3,954, and your expenses remain at $4,140 (they are probably going up, if we’re honest), leaving you with a monthly deficit of about $186.

This example underscores the potential financial impact of changes in work arrangements and the cost of living, such as inflation and commuting costs. If you are finding that you have more month than money, you aren’t alone. But what exactly are you supposed to do? You can ask for a raise, and I absolutely suggest that you do. You can find a new job, and negotiate a higher salary. You could also pick up side work, if you have the mental capacity, but frankly, you shouldn’t have to.

Organizations are paying for your labor. When you exchange your labor for money, you should be able to do so knowing that it’s going to appropriately cover your cost of living. And it used to be that way. My mother in law was a career Executive Assistant. She raised 2 sons on an Executive Assistant salary. They weren’t wealthy, but my husband did not know poverty. We’ve been sold a lie that if we work hard and keep our head down, we will be rewarded. As someone who started at $35,000 CAD at my first Executive Assistant role in 2016, and left my last role in 2023 at roughly $120,000 CAD (thanks to a good exchange rate, it was around 90K USD), I will tell you that it didn’t happen because of the generosity of an employer. It happened because I knew that I had to make things happen for myself. I learned what I could, and I moved on. Until a company gives me a reason to be loyal, I will never encourage it of others. Organizations will look you dead in the eye, tell you there is no room for a raise, and then issue bonuses to their leadership staff. There is money, they just don’t find the value in our work.