The Lifestyle Creep
Income rises, and spending rises to meet it. Upgrading our lifestyle locks us into a treadmill where the cost is our future optionality.
A raise is a validation of effort.
It is natural to celebrate. We move to a slightly nicer apartment, buy a better car, eat out more often, or subscribe to new conveniences. The upgrades feel proportional. We earned the money, so it makes sense to enjoy it. The baseline of what is normal moves up.
Spending an extra $500 a month from a raise, repeated over thirty-five years, costs $210,000 in cash.
Compounded at 7%, the final value is roughly $887,000.
This is the lifestyle treadmill. It is comfortable, and it is almost completely invisible while we are on it.
The danger is not the nicer things. The danger is the lock-in.
Every upgrade increases our fixed costs. It requires a higher salary just to maintain our current level of comfort. The option to work less, change careers, start a project, or take a risk becomes more difficult because the monthly baseline is too heavy to support without the salary.
We trade optionality for comfort.
Saving half of each raise instead of spending all of it recovers $444,000 compounding.
It still allows the standard of living to rise. We still get to enjoy the success.
But it ensures that our freedom grows alongside our income.
The best upgrade is the ability to choose what to do next.