Inflation Is Hitting Women Harder: 77% Are Making Money Sacrifices
Inflation has put pressure on most Americans' budgets, but middle-class women are feeling the strain more acutely than men.
A recent Transamerica Center for Retirement Studies report found that 77% of middle-class women have taken one or more actions to cope with inflation-related financial strain in recent years, compared with 68% of middle-class men.
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"Women are feeling the squeeze even more than men are," said Catherine Collinson, CEO and president of Transamerica Institute. "We see that corroborated in other survey findings, including the percentage of women who cite just getting by to cover basic living expenses as a financial priority."
Faced with rising costs, many women are making difficult financial tradeoffs to stay on track. In this "Financially Savvy Female" column, MoneyLion shares the most common ways middle-class women are responding to inflation, and what they should actually be doing to protect their finances.
Middle-Class Women Are Cutting Everyday Expenses
Nearly half of middle-class women (46%) are cutting their everyday costs, which can include groceries, subscriptions and discretionary spending.
"Reducing day-to-day expenses can be an effective response if the cuts come from nonessential spending rather than necessities," Collinson said. "Finding better deals, shopping more strategically or stretching dollars further can free up funds for emergency savings or retirement. However, essential expenses, such as necessary medications, should not be compromised."
Women Are Tapping Their Savings
More than one-third of middle-class women (37%) said they have dipped into their savings in response to inflation.
"Dipping into savings is not ideal, but it may be preferable to taking on high-interest credit card debt," Collinson said. "For households under financial strain, the goal is often not choosing the best option, but avoiding the worst one. Savings can serve as a buffer and help people avoid debt that may become much more difficult to repay later."
Financial experts recommend rebuilding emergency savings once income and expenses stabilize so households remain prepared for future unexpected costs.
Some Women Are Relying on Debt To Keep Up
Over 1 in 4 middle-class women (26%) are accumulating new debt to stay afloat. While this is a common tactic, it's not the most financially savvy one.
"High-interest credit card debt can become extremely troublesome because interest compounds quickly," Collinson said. "What starts as a small amount of debt can rapidly grow into a much larger financial burden that becomes difficult to pay off."
How Women Can Protect Their Finances Despite Inflation
While these strategies may help households manage rising costs today, most provide only temporary relief. Building long-term financial resilience requires a more sustainable plan.
"Women are never going to be able to reduce day-to-day expenses to zero," Collinson said. "Dipping into savings can only last as long as someone has the savings to dip into. Finally, on credit card debt, it can start out as a small hole that turns into a massive sinkhole quickly, simply because of the high interest rates. And it's just going to be that much harder to pay off down the road."
She recommends taking the following steps instead:
Create a budget: "The most critical starting point is creating a budget, knowing exactly how much income is coming in relative to expenses and identifying how to maintain a positive cash flow," Collinson said. "In the event she comes up short, find ways to bring that equation back in line, which could be bringing in more income, reducing expenses or a combination of both."
Separate "needs" from "wants": "Going through the exercise of making a budget brings a mindfulness to spending that one might not otherwise have," Collinson said. "It raises the questions: 'Do I really need this? Is this a necessity or a luxury?'”
Find inexpensive ways to treat yourself: "Find the little luxuries that can make the greatest impact on your outlook on life," Collinson said. "Often, they're not the most expensive luxuries. It could just be the gift of giving oneself a couple of hours off to go for a walk in the park and enjoy a sunny day."
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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