Why Making More Money Won’t Make You Rich (Unless You Do This)

Right after college, I had to move back home with my parents. I didn’t have a job lined up, and to be fair, it was the summer of 2009. No one did. I picked up a couple of odd jobs, stashed away nearly everything I earned, and because I had no real expenses, my bank account started to grow. I remember one day seeing that I had saved around $12,000. At the time, that number felt massive. I was almost paralyzed just staring at my account, not knowing what to do with it. (Not going to lie, I never felt so rich).

After about a year at home, I landed a full-time job at a consulting firm and moved out. That’s when lifestyle creep started to kick in.

Suddenly, I had rent, groceries, bills, you know, adult stuff. Even though I was earning more, I was saving less. All these new expenses started chipping away at my paychecks.

That’s how lifestyle creep works. You get a little more money, and you spend it. Then you get some more, and you spend that too. Your income rises, and so does your spending. It's a cycle. And you start convincing yourself that once you make a little more money, then you’ll be able to buy that “thing” that will make life better. Then you'll be happy.

Lifestyle creep is when your discretionary spending increases as your income increases. The tricky part is psychological. What used to feel like luxuries start becoming your new baseline. Maybe you once scanned every price tag at the grocery store, but now you toss things in the cart without a second thought. You used to drive a Toyota and be perfectly fine with it. Now you're making more and feel like it’s time for an Audi. Flying coach was totally normal, until you tried business class. Now you can't go back.

And it doesn’t stop there.

Here’s the thing: lifestyle inflation isn’t inherently bad. It only becomes a problem when it gets in the way of saving and investing for your future.

Let’s be real, it’d be weird if you were making over $100K a year and still living at home eating ramen and refusing to spend a dime. We’re not here forever. It’s okay to live a little. You should enjoy your money as you make more of it.

But how do you keep lifestyle creep in check so it doesn’t derail your financial goals?

Let’s bring back: What Would Alan Do?

Here’s my approach:

I think in percentages, not just dollars. This helps keep things balanced as my income grows.

For example, instead of saying, “I want to save $1,000 a month,” try the following as a baseline:

• Save 10% of your income

• Invest 10%

• Live off the remaining 80%

That way, when your income increases, your lifestyle can grow too, but so will your savings and investments.

Here’s how that might look:

Example 1: $40K a Year salary

• Live off of $32K

• Invest $4K

• Save $4K

Example 2: $70K a Year salary

• Live off of $56K

• Invest $7K

• Save $7K 

Example 3: $100K a Year salary

• Live off of $80K

• Invest $10K

• Save $10K

This system gives you permission to enjoy more of your money while still building long-term wealth. But if your income grows and your saving/investing doesn’t, that’s when lifestyle creep can take over.

Imagine someone making $100K who still only saves $4K and invests $4K, that’s just 8%. They're now living off 92% of their income. That’s a slippery slope.

Thinking in percentages helps ensure your lifestyle grows in balance with your financial goals.

It also accelerates wealth-building. As your income increases, your dollar contributions to investing and saving increase too, creating a compounding effect over time. At some point, your investments might start producing returns equal to what you used to contribute when you were just starting out.

It’s no secret, I love rap. Scratch that. I love 1990s to early 2010s rap. For a long stretch, Jay-Z was my favorite artist.

We all know the mogul he is today, but even Jay-Z wasn’t immune to lifestyle creep.

Take a look at the photo below. On the left: gold chains, big watch, taken when he was worth around $100K. On the right: billionaire Jay-Z in a simple black polo.

One of his most iconic lines goes: “What’s fifty grand to a motherf*** like me, can you please remind me?”

When he was worth $100K? That was 50% of his net worth. As a billionaire? It's just 0.005%.

How did he do it? Well, clearly, he read my newsletter and adopted the lifestyle creep percentage rule 😉

Jay-Z said it best:

“The goal is to be rich, not look rich.”

The best way to do that? Live below your means. Invest and Save. Keep lifestyle creep in check.

Note: This is purely educational and is not investing or tax advice