Earning More & Spending Wisely: Strategies for Sustainable Lifestyle Growth

My first year of college, I lived in a three-bedroom house with my sister and our friend, Julie. The rent was $800 total. We split that three ways, and after our utility bills, I never spent much more than $300 on living expenses. My total monthly spend was under $1,000, and at least 50% of that went straight to the sale racks at Gap, Dillard's, or Anthropologie. Oh, how times have changed!

As my income—and now our joint incomes—have increased, I’ve become accustomed to a different lifestyle, and going back to that one would be hard. For my family of four, living on $1,000 a month feels impossible. Increased expenses are a normal part of life. As we earn more, it’s reasonable to expect our expenses to increase.

But how do we increase our lifestyle while ensuring we don’t become trapped in a cycle that requires us to maintain a high income indefinitely? Today, we’ll explore how to assess our expenses, identify areas to adjust, and decide how much lifestyle inflation is reasonable and sustainable.

The Risks of High-Income Dependence

I recently read an article that highlighted the precarious nature of living a lifestyle that necessitates a high income—particularly if that income would be difficult to replace. It got me thinking: how can we thoughtfully increase expenses while staying in control of our financial future?

Somewhat by accident, my husband and I adopted a principle that has shaped how we manage our lifestyle. We decided to keep our necessary expenses below what either of us could reasonably earn on our own. My husband works a stable job and we base our lifestyle entirely on his income. Should he stop working for any reason, I know I could step in and replace his income through my business or another job with a similar salary.

This approach helps us stay in control of our lifestyle and informs our risk tolerance. However, even if you don’t share the same circumstances, there are ways to thoughtfully expand your lifestyle while minimizing the risks of high-income dependence. 

1. Know Your Numbers

You can’t manage what you don’t measure. Start by looking at your budget. Breaking down your expenses into categories is key to understanding which parts of your lifestyle are flexible and which are not.

Permanent vs. Flexible Categories: Some expenses, like a mortgage or car payments, are fixed and hard to change. Other expenses, like dining out or shopping, have more flexibility. Knowing which categories are permanent inflations versus adjustable helps you gauge where you have room to pivot if necessary. If you buy a bigger house with a bigger mortgage, taxes, and utility bills, you will (for a somewhat permanent time period) inflate your lifestyle and require more income. Expensive car payments or leases also add to an inflated lifestyle. 

Think beyond Needs vs. Wants: Don’t just think of expenses as “needs” and “wants.” Instead, ask which expenses genuinely add value to your life. For example, if you own three cars but only drive two, maintaining the third might not be a true need. By examining your “vehicle” category, you can see the costs tied to insurance, registration, and maintenance and decide whether that expense aligns with what’s meaningful to you.

2. Stay Out of Debt

Debt can be a silent driver of lifestyle inflation. Even if your daily expenses seem manageable, debt payments might be eating up a significant portion of your income. I often see clients whose non-mortgage debts take up to 30% or more of their take-home pay.

To avoid this trap, commit to paying cash for discretionary purchases. This principle applies to everything except your primary residence. Using cash keeps your lifestyle tied to current choices rather than past ones and gives you more financial flexibility.

3. Intentionally Decide How to Spend Income Increases

When your income increases, don’t let your spending increase automatically. Be intentional about where the extra money goes.

Prioritize Safety: Use new income to build a cash savings cushion or fund essential goals like retirement and college savings.

Increase Mindfully: Allocate money to categories that genuinely enhance your life. Seeing your categories clearly can help you decide where you want to allocate your money.

4. Protect Your Income

Financial stability isn’t just about how much you earn—it’s about ensuring you can maintain your income in uncertain times.

Emergency Savings: Build a safety net of 3–6 months’ worth of expenses. This will give you breathing room in case of a job loss or unexpected financial challenge. The higher your expenses are, the larger this cushion will be.

Disability Insurance: If your family relies on one or both incomes, disability insurance is essential. Many employers offer this as a benefit, but make sure it’s sufficient to cover necessary expenses if the primary earner can’t work. If you’re self employed, explore policies. 

Life Insurance: Term life insurance should be used to protect necessary wage earner’s incomes. 

5. Invest for the Future

Finally, your lifestyle today impacts what your retirement will look like tomorrow.

Consider Retirement Needs: A more expensive lifestyle now means you’ll need to save significantly more to maintain it later. Conversely, a simpler lifestyle reduces the amount you’ll need to save for retirement. Remember, retirement doesn’t have to mean an age, it can simply be a number you reach. 

Plan with Intent: Work backward to determine what your future lifestyle will cost and how much you need to save now to support it. Balancing today’s enjoyment with tomorrow’s security ensures your lifestyle inflation doesn’t jeopardize your long-term goals.

Taking Control of Lifestyle Inflation

Lifestyle inflation is a natural part of life, but without intentionality, it can leave us trapped in a cycle of dependence on ever-increasing income. By knowing your numbers, staying out of debt, and making mindful decisions about spending, you can create a life that’s not only sustainable but also deeply aligned with your values and goals.

It’s about striking a balance: allowing yourself to enjoy the fruits of your hard work while protecting your financial stability and freedom. When your income grows, let your life grow in ways that truly bring you joy—whether it’s traveling, spending quality time with family, or building a safety net for the future.

Remember, the goal isn’t just more—it’s better. Better choices, better alignment, and better peace of mind. That’s how we build a life that’s both fulfilling today and secure tomorrow.