“Treat yourself.” This iconic line from “Parks and Recreation” has become a cultural mantra and, let’s face it, maybe even a personal motto at times. After all, you’ve just landed a raise. Not only are you bringing home a bigger paycheck, but you’re also working harder than ever to earn it. You’ve got every reason to, well, treat yourself.
But after a few splurges — maybe it’s bottomless brunches, a new bag, or just a couple of nights of takeout — you’re not feeling as flush as you expected. In fact, your bank account might still look a little too familiar.
If your expenses have quickly risen to match your new income, you may be experiencing lifestyle inflation. Whether it’s driven by your own aspirations or a desire to keep up with friends or coworkers, lifestyle inflation can leave you feeling just as broke as before, if not more so.
As a budgeting expert, author, podcaster, and founder of Inspired Budget, Baggerly has helped thousands of people bust out of the paycheck-to-paycheck cycle. She spoke to GOBankingRates as part of our Top 100 Money Experts series to share how to recognize lifestyle inflation and reclaim control of your money — without completely giving up the fun stuff.
Baggerly says lifestyle inflation can sneak up fast. Here are some common red flags:
Upgrades become routine. Maybe you trade in your car early, replace furniture that’s still in great shape, or jump on every “limited-time” sale.
Dining out more than before. Ordering DoorDash or grabbing brunch several times a week starts to feel normal instead of special.
Savings goals stall. Despite higher income, contributions to retirement, debt payments or an emergency fund don’t budge.
Spotting these patterns is the first step to stopping them.
“It’s easy to fall into because it feels like you’re just doing what you’re ‘supposed’ to do,” Baggerly said. “You’re working hard and earning more, so you deserve the nicer couch or the spontaneous weekend trip, right? The problem is that those small upgrades pile up fast, and suddenly that raise is gone. You’re making more, but you still feel broke. That’s lifestyle inflation in action.”
This could look like ordering DoorDash three nights in a row instead of cooking, upgrading your car before it’s really necessary, or jumping on a sale ‘just because.’ Meanwhile, financial goals like paying down debt, saving for retirement, or building an emergency fund get left behind.
But here’s the good news: Being able to spot the pattern is the first step to changing it.
Now that you understand lifestyle inflation, you’re committed to reining in your spending. So why do you feel so glum? If the idea of ditching fun entirely in favor of financial “vegetables” makes you cringe, don’t worry. According to Baggerly, budgeting doesn’t mean banning joy. It just means being intentional.
“There’s nothing wrong with celebrating. But the difference comes down to intention. Celebrating is a conscious choice,” she said. “Overspending, on the other hand, tends to be impulsive. It’s when you buy something just because you had a hard day or because it’s on sale, not because it’s part of your plan.”
Instead of giving up the things you enjoy, Baggerly recommends planning for them. If you’ve got a major milestone on the horizon, set aside a little extra money for dinner out with a friend, a small gift for yourself or even an affordable getaway. Budgeting for these moments reinforces the value of your hard work — and may even help you feel more motivated to reach your next goal.
Conversely, overspending tends to be emotionally driven. It’s about getting that pricey purse after a stressful week or signing up for a scuba class you’ll never take just because it was 40% off. Those decisions might feel good in the moment, but they can completely derail your larger financial plan.
“So, ask yourself: Is this celebration tied to a specific win? Did I plan for it? Or is it just me trying to fill a gap with stuff?” Baggerly said. “If it’s the second one, it might be time to hit pause and check in with your spending habits.”
If your budget feels like a punishment, you’re not going to want to stick to it. That’s why Baggerly emphasizes balance over restriction. Budgeting should be a tool to help you grow your wealth, not a reason to feel deprived.
One of her top recommendations: automate your savings. Whether it’s a raise, bonus, or side hustle income, set up automatic transfers to savings or your emergency fund before the money even hits your checking account.
“If you don’t see it in your checking account, you won’t be tempted to spend it,” she said.
That still leaves room for some guilt-free spending. If weekly takeout helps you unwind or a monthly massage keeps you grounded, plan for it. These splurges are only problematic when they’re unplanned or excessive.
Baggerly also uses what she calls the “upgrade one thing” rule to help clients manage an increase in income responsibly.
“Instead of upgrading everything when you get a raise, choose one area of your life to improve,” she said. “Maybe it’s your grocery budget, or maybe you finally hire a cleaner once a month. This helps you enjoy your progress without blowing your budget.”
When you earn more, it’s easy to spend more. But without a plan, that bigger paycheck can disappear just as fast as your old one.
The trick is to be intentional. Celebrate wins, but tie them to meaningful moments. Budget for fun, but keep your long-term goals front and center. And if you ever feel like your spending is outpacing your income, know that with some thoughtful planning, you have the power to take back control.
This article is part of GOBankingRates’ Top 100 Money Experts series, where we spotlight expert answers to the biggest financial questions Americans are asking. Have a question of your own? Share it on our hub — and you’ll be entered for a chance to win $500.
