Margo Schlossberg never considered herself to be much of an indulgent spender.
Even though there was plenty of opportunity to splurge on fine dining and high-end beauty treatments in the upper-middle-class Washington, D.C., suburb of Reston, Va., where she lives, she never felt particularly tempted to partake.
That is, until the 44-year-old marketing professional landed a hefty raise that made her paycheck fatter by $2,000 more per month—which had an almost immediate effect on her spending.
“I started indulging more in the little things,” Schlossberg says. “I got more manicures and pedicures, went out to eat a lot more and splurged on fancy drinks.” On top of that, she took a pricey dream trip to Sri Lanka.
Schlossberg’s rationale? Her workload had doubled and she was putting in an intense, ten-hour workday while also enduring a taxing, two-hour commute. So she felt deserving of the good life—or at least a better one.
While Schlossberg’s newfound spending didn’t put her in the poorhouse, it didn’t get her ahead, either. Her savings often fluctuated due to her splurging, and she never took the time to rejigger her budget to see how her added income could be put to better use. “I didn’t run into money trouble, but I should have known better,” she says. “But, hey, I’m human.”
Schlossberg certainly isn’t the only person guilty of using a raise as an excuse to bump up her spending. In fact, there’s a popular term for this common story line: lifestyle inflation, or the idea that as you make more, you spend more.
This, in turn, can make you feel a bit like a hamster on a wheel when it comes to your money: You have to keep running at full speed just to keep up with your new bills and satisfy your spending urges—without making any progress on your financial goals.