How to Avoid Lifestyle Inflation as a High-Earning Individual

As you progress in your career, you may receive promotions and raises that boost you to a position where you’re considered a high earner. Though definitions vary, many people consider someone a high earner if they make over six figures or $100,000. 

Becoming a high earner can feel surreal, but surprisingly, even after earning a significantly higher paycheck, some people may feel like they don’t have as much money as expected. Sometimes, this is a symptom of lifestyle inflation or increasing your spending as your income goes up in an effort to maintain a certain perceived lifestyle. Here are some things to consider that may help you avoid lifestyle inflation as a high earner.

Be mindful of your budget

Even as a high-earning individual, you may find it useful to keep track of your budget, including monthly expenditures on mortgage or rent, credit card payments, utilities, food costs, discretionary spending, term or whole life insurance, investments, and savings. By maintaining a close eye on your budget even as your income grows, you can be equipped to make smart choices that can help you celebrate your financial standing while staying on track with long-term goals. 

Set money aside to celebrate

While it’s important to monitor your budget, you shouldn’t be afraid to enjoy your success. Consider creating a line item in your monthly spending that includes goods and services you enjoy, like clothing, spa or massage treatments, and experiences, like travel to destinations you’ve wanted to visit. Intentionally increasing the amount you spend on fun can help ensure that you are making wise spending decisions and still celebrating the fruits of your hard work. 

Assess your insurance policies

Since life insurance policies are often used to replace your income if something happens to you, it’s important to reassess your current policies as you earn more. Whether you have term, whole, or universal life insurance, work with your insurer to increase the death benefit so it will support your family’s upgraded lifestyle. Just as your lifestyle can change in line with your financial successes, your insurance and other policy needs may need revisiting and adjustment as your career evolves and grows. 

Strategize about savings and investments

A key way to avoid lifestyle inflation is by maintaining your dedication to savings goals and by being thoughtful about your investments. You may want to consider automated or scheduled transfers into your savings accounts, as well as reviewing your current investments. As you consider investments, decide if you may want to make new investments, investigate some fresh companies to invest in, or diversify into stocks, bonds, or other avenues to help expand your financial future in the ways that are most important to you.

Remember to breathe and appreciate the view

Above all, you may find it centering to pause and appreciate the hard work and dedication that have helped you to achieve your high-earning financial status. No matter what, be mindful to give gratitude, celebrate your wins, and keep your future goals as a guiding principle in all that you do next.