Earning more but still broke? Blame it on lifestyle inflation - expert explains how it is killing your wealth
CA Nitin Kaushik, in a social post, explained that incremental increases in lifestyle expenses can quietly erode your future financial stability. Succumbing to the temptation to splurge on luxuries like nicer cars, dining at expensive restaurants, or upgrading to larger homes may result in higher expenditures without a corresponding boost in savings.
- May 17, 2025,
- Updated May 17, 2025 2:21 PM IST
If your income has grown but your savings haven’t, you’re likely a victim of lifestyle inflation — a subtle yet damaging financial habit that creeps in as earnings increase. It’s the tendency to upgrade your lifestyle with every raise: a new car, weekend getaways, luxury gadgets, or premium housing. While these feel like well-deserved rewards, they often leave your financial health stagnant — or worse, deteriorating.
CA Nitin Kaushik, in a social post, explained that incremental increases in lifestyle expenses can quietly erode your future financial stability. Succumbing to the temptation to splurge on luxuries like nicer cars, dining at expensive restaurants, or upgrading to larger homes may result in higher expenditures without a corresponding boost in savings. While your income grows, it's important to resist the temptation to increase spending excessively and prioritize building your financial security through saving.
"Earning More but Still Broke? Lifestyle Inflation Is Killing Your Wealth! Ever wondered why your bank balance stays the same (or worse, shrinks) despite earning more? Lifestyle inflation is the silent thief robbing your future wealth," Kaushik wrote on X.
He further explained that the problem lies in the mindset: more income justifies more spending. But while your expenses climb, your savings and investments don’t keep pace, delaying essential goals like buying a house, creating an emergency fund, or achieving early retirement.
This cycle traps you in a paycheck-to-paycheck existence, even if the paycheck is a big one. The result? You’re earning more, but financial freedom remains out of reach.
He noted that the bestselling book, The Millionaire Next Door, offers a crucial insight: most millionaires don’t live flashy lives. Instead, they live below their means, invest consistently, and avoid impulse upgrades. Wealth, they understand, is what you keep—not what you spend.
Many in the middle class find themselves stuck in a silent financial trap—luxury disguised as progress. As salaries grow, so does the desire to "upgrade"—from premium phones to fine dining and expensive vacations. These purchases feel like signs of success, but often mask a deeper issue: lifestyle inflation. Despite earning more, many feel perpetually broke, living paycheck to paycheck, and pushing long-term goals further away.
The problem? Spending rises with income, while savings remain stagnant. EMIs pile up, emergency funds are ignored, and investments take a backseat. Financial stability is replaced by the illusion of affluence. The middle class, especially urban professionals, becomes vulnerable—not from lack of income, but from unchecked spending patterns.
How to break the cycle:
> Track your spending: Review your expenses weekly. You’ll be surprised how much leaks into non-essentials—subscriptions, food delivery, impulse shopping.
> Automate savings: Treat savings like a non-negotiable expense. Set up automatic transfers to mutual funds, PPF, or a recurring deposit as soon as your salary arrives.
> Pause before spending: Before buying, ask: Is this improving my life or just projecting an image? That pause could save you thousands and help you reclaim control over your finances.
If your income has grown but your savings haven’t, you’re likely a victim of lifestyle inflation — a subtle yet damaging financial habit that creeps in as earnings increase. It’s the tendency to upgrade your lifestyle with every raise: a new car, weekend getaways, luxury gadgets, or premium housing. While these feel like well-deserved rewards, they often leave your financial health stagnant — or worse, deteriorating.
CA Nitin Kaushik, in a social post, explained that incremental increases in lifestyle expenses can quietly erode your future financial stability. Succumbing to the temptation to splurge on luxuries like nicer cars, dining at expensive restaurants, or upgrading to larger homes may result in higher expenditures without a corresponding boost in savings. While your income grows, it's important to resist the temptation to increase spending excessively and prioritize building your financial security through saving.
"Earning More but Still Broke? Lifestyle Inflation Is Killing Your Wealth! Ever wondered why your bank balance stays the same (or worse, shrinks) despite earning more? Lifestyle inflation is the silent thief robbing your future wealth," Kaushik wrote on X.
He further explained that the problem lies in the mindset: more income justifies more spending. But while your expenses climb, your savings and investments don’t keep pace, delaying essential goals like buying a house, creating an emergency fund, or achieving early retirement.
This cycle traps you in a paycheck-to-paycheck existence, even if the paycheck is a big one. The result? You’re earning more, but financial freedom remains out of reach.
He noted that the bestselling book, The Millionaire Next Door, offers a crucial insight: most millionaires don’t live flashy lives. Instead, they live below their means, invest consistently, and avoid impulse upgrades. Wealth, they understand, is what you keep—not what you spend.
Many in the middle class find themselves stuck in a silent financial trap—luxury disguised as progress. As salaries grow, so does the desire to "upgrade"—from premium phones to fine dining and expensive vacations. These purchases feel like signs of success, but often mask a deeper issue: lifestyle inflation. Despite earning more, many feel perpetually broke, living paycheck to paycheck, and pushing long-term goals further away.
The problem? Spending rises with income, while savings remain stagnant. EMIs pile up, emergency funds are ignored, and investments take a backseat. Financial stability is replaced by the illusion of affluence. The middle class, especially urban professionals, becomes vulnerable—not from lack of income, but from unchecked spending patterns.
How to break the cycle:
> Track your spending: Review your expenses weekly. You’ll be surprised how much leaks into non-essentials—subscriptions, food delivery, impulse shopping.
> Automate savings: Treat savings like a non-negotiable expense. Set up automatic transfers to mutual funds, PPF, or a recurring deposit as soon as your salary arrives.
> Pause before spending: Before buying, ask: Is this improving my life or just projecting an image? That pause could save you thousands and help you reclaim control over your finances.