Amid a difficult economic landscape, consumers are often told to improve their budgeting to clear debt and build wealth. But a recent example of a high-profile financial plan suggests that’s not necessarily the best advice.
New York City mayor Zohran Mamdani has unveiled a new budget that he says will eradicate the city’s $12bn debt “entirely down to zero”—and will do so “without placing the burden on the backs of working New Yorkers.”
Mamdani followed through in hitting the rich with higher taxes, requesting a 2 percent personal income tax increase on the wealthiest New Yorkers.
However, a big dent in the $12bn deficit came from a major windfall: $4 billion in aid after a partnership with Albany, according to CBS.
If the richest city in the U.S. needs to collect billions from its neighbor to balance the books—even after cutting as much unnecessary spending as possible—where does that leave the average American just looking to have slightly healthier finances?
Experts told Newsweek there’s a key takeaway—and it’s not fewer takeout coffees.
What households really need
The idea that people are struggling financially because they can’t cut down on daily spending peaked in 2017, when Australian millionaire Tim Gurne used “avocado toast” as a symbol of perceived financial irresponsibility in millennials, advising them to put their “$22 a pop” breakfast towards a down payment instead, spawning outrage and memes.
Since then, the notion that personal finance struggles are an individual failure persists, as many Americans struggle to keep up with rising costs.
The Bank of America reported in 2025 that almost a quarter of all households in the US live paycheck to paycheck, with inflation growing faster than middle and lower-income households’ after-tax wages.
Anupam Satyasheel, CEO of Florida-based financing advisory firm Occams Advisory, told Newsweek that Mamdani’s success “inverts” the idea that small changes lead to big differences.
“The ‘tax the rich’ piece grabbed headlines but caused the least financial enhancement,” he said, describing it as a reminder that, when it comes to personal finance, “the biggest moves usually aren’t the ones creating the biggest impact.”
“The key driver was getting more money in, not more savings,” he said. “The ‘latte factor’ is real arithmetic—it’s just the wrong arithmetic to optimize.”
But while skipping a $5 daily coffee can save $1,800 a year, one raise can make thousands.
As Satyasheel put it: “One of these moves can be made in a month with one serious conversation. The other requires 365 acts of willpower for a fraction of the result.”
“Income is the bigger factor,” he advised. “Negotiate, switch jobs, build a second income stream. The ceiling on income is higher than the floor on expenses.”
Debt and bankruptcy lawyer Ashley Morgan, based in Northern Virginia, agrees that even people who have cut most of their discretionary spending “still cannot get ahead because the math simply is not working,” and added that “increasing income can have a much bigger impact than obsessing over every small expense.”
This “changes a financial situation much faster than trying to save a few dollars a day,” she said, but acknowledged that people’s ability to do this can be “limited,” and “the current economy has very stagnant wages.”
Jeff Judge of Chesapeake Financial Planners in Maryland shared a story of a client who scrimped for months, cutting subscriptions, bringing lunch from home, and managed to save around $200 a month—but hadn’t asked for a pay rise for four years. Until, finally, “one uncomfortable conversation with her manager” bagged her an extra $8,000 a year.
He believes that the small-savings advice is “not wrong, it’s just insufficient,” and agrees that the impact of Albany’s aid on New York City’s deficit exemplifies that.
“In personal finance terms, that’s a pay raise or a better-paying job,” Judge said.
More Money Won’t Solve Everything
Morgan warned that increased income “does not automatically solve financial problems,” as often people get raises and “immediately increase spending” instead of focusing on long-term financial stability, and the financial pressure remains.
Judge agreed that “the lesson isn’t ‘don’t save,’ the lesson is proportionality.”
“Small savings are worth capturing once the income floor is stable, but you can’t cut your way to wealth,” he said.
He advised that people ask themselves if they have a “version” of the Albany money, such as a second job, a certification or underperforming asset.
Morgan added that people should look at whether their “overall financial structure works long term,” as relying on credit cards or lacking emergency savings, “are usually much bigger indicators of financial stress than small discretionary purchases.”
There also has to be a balance, she said.
Living frugally and “extreme budgeting” may work temporarily, but most households “cannot maintain deprivation for years,” and “quality of life matters”—even if it’s only the treat of a takeout coffee.
Actionable Lessons
Mamdani’s approach to the budget offers tips for people who aren’t in a position to ask for a pay rise, too.
Satyasheel says the mayor found $1.75bn by “auditing contracts, headcount, and processes,” and said the household equivalent isn’t small daily spends—it’s housing, transportation, insurance, and subscriptions.
Judge also highlighted the Mamdani didn’t tap reserves, and households, too, should aim to never “raid the rainy-day fund.”
Americans’ household debt is estimated to be more than 68 percent of the country’s GDP, according to data published by St Louis Fed.
Morgan said that in Mamdani’s case, the city had reviewed the budget and likely “realized they could not realistically cut enough expenses to solve the issue,” adding that “personal finances work similarly for many households.”
“Before making budget cuts or panicking about debt, you need to understand where the money is actually going and whether the problem is spending, income, or both,” she said—but, like in NYC, “either income has to increase, expenses have to decrease, or both.”
Read the full article here
