How Lifestyle Inflation Kept Me Broke — Until I Took Control
I was 20 years old, earning $9.50 an hour as a shift supervisor at Five Guys Burgers and Fries. No bills, no responsibilities, and no clue about how to manage money. I didn’t know what compound interest was, didn’t have a budget, and had never heard of a 401(k). I was just a young adult in New York City, living paycheck to paycheck and spending freely.
Then came my first big break. Through networking, I landed a job at Target as a Food Manager in Queens. My hourly wage jumped from $9.50 to $14.50 — a huge leap at the time. I remember telling the franchise owner of the Five Guys about the offer, and he said, “Yeah, I can’t match that.” I figured as much. No one was making that kind of money there back then. I accepted the job, excited for the next chapter.
With nearly $800 more in my wallet each month, you’d think I would’ve started saving, opened a retirement account, or built an emergency fund. But I didn’t. I had no financial obligations and no financial education. I was just a kid with more money and more freedom to spend. That’s why I’m so passionate about what I’m building here at Pennies Earned. I want others to avoid the mistakes I made and take full advantage of their financial opportunities.
Making an extra $5 an hour felt like winning the lottery. I could eat wherever I wanted, take Ubers instead of the subway, go out with friends, and enjoy the city. Maybe it was a reaction to my upbringing — wanting to experience things I couldn’t afford as a kid. I bought season passes to Six Flags two summers in a row and spent money like it was endless.
Life felt amazing.
Fast forward three years. I was promoted to Senior Team Leader at Target, earning nearly $8 more per hour than when I started. I was 25, still without major bills — just a cell phone and transportation costs. No kids, no mortgage. I had every opportunity to save, invest, and max out my 401(k). But what did I do?
I bought a new car.
It felt like a rite of passage. I was finally an adult. My girlfriend (now wife) and stepfather came with me to the dealership. I was proud, signing the paperwork on a car loan that came with high interest and monthly payments that ate up my raise. Sure, I needed the car for the job, but if I’d saved during those first three years, I could’ve bought a used car outright and avoided the debt.
That’s lifestyle inflation. You earn more, and instead of building wealth, you build expenses. You upgrade your lifestyle — new car, nicer apartment, gym memberships — and suddenly, your budget is stretched thin again. You feel like you need to earn even more just to stay afloat. Lifestyle inflation is a silent killer of free cash flow and financial progress.
At 25, I was making more money than ever, but I wasn’t any closer to financial freedom.
Two years later, I transitioned from hourly to salaried. My income jumped by nearly 40%. I felt like I’d finally made it. No more calculating hours — just consistent paychecks. So what did I do next?
I moved out.
I’d been living with my grandmother in the Bronx, commuting daily to Queens. The commute was long and draining, especially late at night. My environment pushed me to make a change. I wanted to live somewhere quieter, safer, and more comfortable. So I saved for a few months and moved into a one-bedroom apartment in Queens.
Rent: $1,800 a month.
Over two years, I spent $43,200 on rent alone. If I’d stayed with my grandmother, I could’ve saved that money, invested it, or used it as a down payment on a home. Instead, I was stressed — managing bills, groceries, utilities, and trying to enjoy the fruits of my labor. It was my first time living alone, and I quickly realized how expensive independence could be.
I told myself I could afford it. I didn’t have many bills outside of my car note and insurance. But the reality was different. I was living paycheck to paycheck again, just at a higher level. The pattern was clear: every time I earned more, I spent more. The money that could’ve set me up financially was going to big corporations — car lenders, landlords, and retailers.
Eventually, I learned my lesson.
I hated the feeling of making more money but still being stressed about finances. I kept adding expenses that weren’t necessary. I understand the desire to move out, buy a car, or upgrade your lifestyle. But those decisions should be made with intention, not impulse.
When my next promotion came, my wife and I had a serious conversation. By then, we had our daughter and our own place. But we decided to make a short-term sacrifice for long-term gain. We moved back in with family to save money, pay off debt, and prepare to buy a home that made sense for us.
That decision changed everything.
We stopped chasing lifestyle upgrades and started chasing financial freedom. We built a budget, tracked our spending, and made intentional choices. We learned to live below our means and prioritize our future over temporary comfort.
What Is Lifestyle Inflation?
Lifestyle inflation happens when your spending increases as your income increases. Instead of saving the extra money, you upgrade your lifestyle — new car, bigger apartment, more dining out — and end up with the same financial stress, just at a higher income level.
It’s a common trap, especially for young professionals. You feel like you’ve earned the right to enjoy your money, and you have — but not at the expense of your future.
How to Avoid Lifestyle Inflation
Here are the steps I now take to make sure lifestyle inflation never gets me again:
- Save the difference: When you get a raise, increase your savings before your spending.
- Automate your finances: Set up automatic transfers to savings and retirement accounts.
- Delay upgrades: Just because you can afford something doesn’t mean you need it now.
- Track your spending: Awareness is the first step to control.
- Live below your means: Build a lifestyle that’s sustainable, not just impressive.
- Have honest conversations: Talk with your partner or family about financial goals and sacrifices.
My Thoughts
Lifestyle inflation kept me broke for years. I earned more money, but I didn’t build wealth. I upgraded my lifestyle, not my future. But once I recognized the pattern and made intentional changes, everything shifted.
Now, I’m focused on helping others avoid the same trap. Pennies Earned is about learning from mistakes, making smarter choices, and building a life of financial freedom — one step at a time.
If you’re ready to take control of your money and stop feeling broke after every raise, you’re in the right place.