196. Making More Money Isn’t Fixing Your Stress

What happens when your income goes up, but your peace does not? In this episode, Laura breaks down the sneaky problem of lifestyle inflation—the way raises, extra income, and increased earning power quietly get absorbed into a more expensive version of everyday life. More groceries, more eating out, more shopping, more conveniences, more activities… and somehow still no margin. 

Laura shares how lifestyle inflation shows up slowly, why Americans struggle to leave empty space in both their homes and their budgets, and how “just a few little upgrades” can quickly become a whole lifestyle that is hard to sustain. She also shares real-life coaching stories, practical examples, and the mindset shift needed to stop automatically upgrading and start building margin on purpose. 

In this episode, you’ll learn:

•  Why lifestyle inflation is so easy to miss while it’s happening 
•  How raises get absorbed into groceries, eating out, shopping, and conveniences 
•  Why going up in lifestyle feels easy, but cutting back feels painful 
•  Where lifestyle inflation shows up most in everyday family life 
•  Why more income should increase your savings and patience, not just your spending 

Listener Note

Laura also mentions a short listener survey in this episode. It takes about two minutes, and when you fill it out and leave your name and email, you’ll be entered to win a $50 gift card. Click this link. 

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Transcript

Laura 0:00

What happens when your income goes up but your peace does not? That's the problem with lifestyle inflation. It rarely shows up all at once. It shows up little by little, a nicer grocery bill, more conveniences, another activity for the kids, a little more eating out, a little more shopping, slightly better version of normal. And before you know it, the raise is gone, the margin is gone, and you're still wondering why money feels so tight. You are listening to the Money and Legacy Podcast with Laura Sexton. I'm helping families pay off debt, grow wealth, and build a legacy without sacrificing what matters most. This is where money feels easy. Hey, legacy builders. Welcome back to the podcast. Today, we are talking about lifestyle inflation, and this is one sneaky little thing because most people do not realize it's happening while it's happening. Also, before we jump in, thank you for being here. We have had a lot of new listeners lately, and I wanna make sure that I'm making episodes that actually help you the most. So I put together a super short listener survey. It takes about two minutes, and when you fill it out and leave your name and email, you will be entered to win a$50 gift card. The link is in the show notes, and I would really love your feedback. Let's talk about why money still doesn't always feel like enough. Lifestyle inflation. It's going to happen slowly, and it's usually not one giant reckless decisions, but rather a bunch of small upgrades that slowly become normal. Think about it. When you go to the grocery store, you have a little bit more money that you put into that category. Or even worse, you go to the grocery store and you follow your plan, your shopping list, and then you're like,"Well, I made a little bit extra today, so I can go ahead and we can throw a couple extra things in the cart." Or instead of buying the steak we usually buy, let's buy the more expensive version'cause it's gonna taste better. So we've been to the grocery store, but you know what? I'm feeling a craving for going out to eat, and we make a little bit more money now, so we can put a little bit of extra money into the going out to eat. And while we're here, not only am I going to get the extra guacamole to go with my food, but I'm going to get a third margarita. How about that? And you know what? We make a little bit more money, so now that we have gone to the grocery store, so we had food at home, but we really wanted to go out to eat to celebrate the fact that we're making a little bit more money now. And, I've had a couple margaritas, so why don't we go shopping, right? Like, let's go to Target, and let's go see what we can find. Oh, let's throw some dessert in the cart, and let's... Oh, I think, this little convenience over here is gonna be great for us. Let's go ahead and put that in the cart. Do you see what's happening? What we said in the beginning was we make a little bit more money, so we bought more groceries. We got extra while we were eating out, and we did more shopping. Now, you may have had a little bit more money from your paycheck, but if you spend a little bit more in all of the different categories, your little bit more money is now completely gone. And for what? A few more conveniences? When you're adding, a couple more activities or a couple more going out to eat, your raise is getting absorbed instead of creating margin, and margin is what ultimately we want. We want to be able to make these little bit more decisions, but you have to make them intentionally. And if you're not careful, lifestyle inflation becomes a lifestyle, and that's not what we want to have. We need to, in these instances, plan ahead. What are we gonna do with the money when it comes in? How are we planning to spend it? How much of the extra are we going to put towards saving, towards future us, instead of just consuming all of it? We, as Americans, do not like empty space. A lot of people treat an extra money like it has to be used immediately instead of protected. So think of it like this: think of a room in your house that has shelves in it. Do you have any empty shelf space? Probably not, because if there is room on the shelf, we f- feel the need to fill it, and if there's room in the budget, we feel like we need to fill that, too. Empty feels like lack. And for whatever reason, the American psyche says if you're lacking something, you have to fill that with something. If there is emptiness, it feels like there's something wrong, and so we have this strong desire to fill it. And I would like to give you permission, if you have empty spaces on your shelves, to leave it that way. And if you don't have empty space on your shelf and you wanna see what this feels like, and you wanna try out this emotional experiment with me, why don't you go take some stuff off the shelf, box it up, and put it in the garage or put it somewhere where you can't see it, and I want you to see how quickly you fill that space up. I'm about to do this on a very big scale. We are going from 900 square feet to 2,700 square feet, and so there's going to be a lot of empty space because we don't have the things that are needed to fill up that amount of space. I am happy that we are going to have a limited budget for the first year where things are going to be tighter so that I am not tempted to immediately go fill the space. Extra money starts to feel like permission to spend instead of an opportunity to expand. What I am going through on a visceral level right now is learning to live in the empty space, learning to be okay with it. I'm trying to teach this to my kids. When they have a empty space in their things to do, they wanna fill it up with television, or they want mom to come give them something to do, and it's the empty space where creativity lives. When you have room to breathe, you have room to be creative. Sometimes with our finances, we need to get creative. Let me explain to you that Uber and Lyft, those conveniences, Instacart, these conveniences that a lot of us spend our money on, those things would not exist were there not a gap in the market, were there not some space for somebody to be creative and come up with a creative way to fill that need. I've heard it said many times that necessity is the mother of all invention. with our kids, when they're bored, and they should be bored more often, they will create a game. They will come up with an idea. They will get creative and make something with their hands. They need the space to do that, though. And we as adults are exactly the same. We need the space to be creative. We need the space, but we don't give ourselves that permission. And when it comes to our money, the margin sometimes feels uncomfortable because we're not used to there being a gap. We're not very good at leaving the margin empty. But if you go back to first grade English class, those margins are supposed to be empty. You're not supposed to write in them. Going up in lifestyle feels really easy, but going backwards feels very painful. Once an upgrade becomes normal, cutting back feels like a loss. Sometimes it's like this with money we haven't actually earned. You think you're gonna get a raise, and so you start spending the money, like Christmas vacation, where they start spending all the money. They break ground on the pool. They decide they're gonna build out this whole pool, and instead of a bonus, he gets the Jelly of the Month Club We feel like we've lost something because we've already spent the money in our mind. If your boss says,"Hey, I'm gonna give you a raise. Come into my office later today and we're gonna talk about it," and you're thinking,"He's gonna give me$100,000. I'm gonna get this bonus and it's gonna be amazing." And you get there and it's like,"Here's 20 bucks. Thanks so much for the work you've been doing." You didn't need the$100,000 and you didn't need the$20, but in the time between, you started spending all this money, and then you're gonna feel like he slighted you because you make it up in your mind, and you start spending it in your mind. And so anything feels like a loss. The same is with your finances. I can't tell you the number of clients that I have that come to me and they have all of these nice, lavish, expensive things, and we have to downgrade. And they feel like they're just really losing. I can't... I can't go back. I can't go from my$50,000 car to a$20,000 car, because then what will people think of me? I can't go from that because then it won't be as safe." Let me tell you, your$50,000 car after three years of driving it around is just as safe as a three-year-old Honda. The features may be a little bit less, but you're still safe. But you feel like you've lost something. You've lost some sort of status. You've lost some sort of prestige. An upgrade is going to feel harmless at first. But then they become expected. And when it's expected, then it's a necessity. And when I'm writing out my budget, it's a necessity on my budget, so it has to go at the top of the list and other things can fall down to the bottom. And then you reach a place where simplifying your life feels like punishment. I don't want... I don't wanna punish you. I don't want you to feel punished. But you have to realize, that people adapt fast to a more expensive version of life, but going backwards is very difficult. So if you want these things in your life, you need to set yourself up for it. What you don't wanna do is get into a position where you're making payments on everything because you couldn't tell yourself or your children no because going backwards feels painful. And if I have to tell my kids no when they think it's a necessity because they've started to expect the increase, and now I'm having to tell them no, it feels like I'm hurting them. But you're not. You are making decisions that are best for them. It's like the other day when we had to go get stitches and my three-year-old was freaking out, obviously, because it's painful and it was hard for me and it was hard for her and the whole thing was terrible. But we had to give her a shot to numb the area so we could do the stitches. And it's incredibly painful, and she didn't want to do it. But I knew as the parent that a little bit of pain now would make it feel easier later. It is the same for you and your money, my friend. So if it can be a little bit difficult right now, and we can save up money and we can buy the thing in cash, whatever the thing is, it keeps it from being painful in the future. And by allowing that space, that margin, that time to breathe between deciding I want the purchase and saving up for the purchase, we are keeping ourselves from massive lifestyle inflation. We are keeping ourselves from impulsivity. We are keeping ourselves from these things becoming necessities. They are not. It's all a choice that we are choosing to make. So let's talk about where lifestyle inflation shows up most, because I've talked about a couple things here, but I feel like in daily life it often shows up in small categories before people even notice the bigger problem. For us right now, it's kids activities. We are entering into the summer season, and do you know what that means? Summer camps. That means extra activities. It means they're going to be home all day and needing somebody to entertain them, and it's certainly not going to be able to be me. I can't entertain five people, keep all of them fed, keep the house clean, keep my business running, keep myself taken care of all the time. They're gonna have to have some margin. They're gonna have to have some activities for themselves, and they're gonna have to have some individuality. They're going to have to make some of their own decisions. The ones that are old enough to do that, obviously. But we've been talking a lot about what does camp look like, what kind of activities do we wanna put them in, and it is not the easiest thing in the world to come up with all of these ideas. We sat down and we talked about our oldest just bought a guitar. She saved up money, and she won it in a school auction, which was fabulous. I'm so excited for her because it was about a quarter of the price that she was planning on spending. And she took the money to school and she had to pay for it, and she had to count it out, and it was amazing. I'm so proud of her for saving up her money, first of all. But one of the things that we wanna do, we told her if she bought the guitar, we would pay for guitar lessons. So guess what we're gonna be doing this summer? We are putting her in guitar lessons, but then also there's Girl Scout camp that she wants to do. We wanna put the kids into swimming class because we wanna make sure that they're safe while they're swimming, and we- saying yes and yes and yes and yes and yes, that's money that adds up that I don't necessarily have. Let's talk about clothes. Lifestyle inflation will... As you are trying to... And this especially comes up a lot for teenagers,"I wanna look like my friends. I wanna fit in. I have to buy the newest trends." Trust me, I am moving to a new state and I have grown a size or two since having five children, and I'm having to buy clothes and I wanna buy the nice ones. I don't wanna buy stuff that doesn't look good. I wanna buy stuff that looks like I fit in. I wanna buy stuff that looks nice. I wanna look good for my husband. But what I don't want to do is spend a ton of money on clothes that look good today and then are out of fashion tomorrow. You have to be smart. Do I need some fashionable pieces that fit with the trend? Yes. Do I need all of them? No. Most of them need to be staples that I can weave in and out. Same with any kind of shopping. We have to be very considerate of what it is that we're buying. One of the things I really want to do for my new house is I wanna be able to decorate for all of the seasons. I don't need a welcome mat for every different season, but Target sells them. There's one for Fourth of July. There's one for Valentine's Day. There's one for Christmas. You don't need all the different things for all of the different things. But you want them. I want them. That's how I know. Groceries. This is a big place for lifestyle inflation to show up. Man, it is so easy to just go buy more and more and more and more and more and then never use them. I'm in the process of trying to use everything in my pantry before we move and, there's so much stuff in this pantry that I never use, that I thought,"Oh, for sure I'm gonna do this one recipe," and I never got around to it. It's wasteful. It's crazy. Eating out. This is a small category where people don't even pay attention, and sometimes it's me. I've been better at this, but sometimes I forget that we've already gone out to eat during this pay period even though I balanced the budget. I have completely forgotten that during this paycheck we've already gone out to eat and we've already spent the money and so I'm gonna go out again. Little conveniences, subscriptions, beauty, and other lifestyle areas. Let's look at housing when it comes to lifestyle inflation. I'm willing to bet you large amounts of money that you're not going onto Zillow looking for a smaller, cheaper, simpler house. Nine times out of 10, when you go browse on Zillow, you are looking for something bigger. You are looking for more square footage. You are looking for more bedrooms. You are looking for more bathrooms. You're looking for a bigger backyard. People browse up. You're not browsing down. So here is a real-life example of how incredibly bad that this can get. I need you to know that high income does not protect people from lifestyle inflation. In fact, what it does usually is it hides it. I had clients that made$35,000 per month, not per year. They made$35,000 per month, and they were still broke. Every want that they saw became a payment because,"Well, I can afford the payments." That was until they couldn't. Cars, purses, houses, upgrades, kids, lifestyle. There was no margin for emergencies, so any emergency that came up went on a credit card. One unexpected anything, another payment plan. It got to the point where they decided they couldn't keep living where they were living, so they needed to move out of their state and move to a different one. He got another job. He was retiring from the military, so he was gonna have his military pension and his income from his new job. She was working two jobs, and they were doing all this just to cover their payments because they had all four incomes. They moved out of their house that was too much money for them that they could not afford, and they moved into a bigger house with a bigger payment. And they said,"Well, I assume because we're bringing in the pension and I have my new job now, we should be able to cover it." That's when we had to choose to part ways because the decisions they were making were not leading them towards paying off their cars, paying off their credit cards. When I'm working with somebody and we start with 35 lines of credit, and over the course of six months we jump up to 42 lines of credit, we are going the wrong way And I only wanna work with you if you are willing to put in the work and make the changes. Now, I love this couple, and I would jump back into helping them in a heartbeat if they chose to change the way they are doing things, but if they are going to continue,$35,000 a month, and they are still broke. A$100 repair a new tire or a broken window or anything like that, they needed to cover$100, they would have to put it on credit because they do not have the ability to make all of their payments and still have any kind of margin. That's why I get really, really animated about this lifestyle increase situation, because when income increases, the answer is not automatic upgrades. The answer is intentionality. Stop automatically assuming that you can do more and choose to pause. Pause when you find out that your income's going to go up, because I want you to direct your increases towards the future first. We need to build margin into your lifestyle. That starts by asking yourself what actually matters. When your spending does not align with your values, sometimes we don't see it because we're just in the day-to-day. We're just trying to keep our head above water. Right now in the move, I'm just trying to keep my head above water. I'm just trying to do the bare minimum to keep the house going while also packing, also caring for five children, also caring for myself, making sure my husband and all of his stuff's taken care of. We're gearing up for retirement. We're going to have multiple balls in the air as we move across the country. It's so much, and all I can do is keep my head above water, and sometimes I make spending decisions that don't align with my values. So I'm having to, in this season, pause longer before I make any spending decisions. For you, I want to reiterate that what you should be increasing is your savings and your patience, not your lifestyle. So here's the question that I want to leave you with this week: Where is lifestyle inflation already happening in your life? What categories keep creeping up little by little, month after month? If my income's gone up, has my peace stayed the same? Am I building margin or just a prettier version of stress? I don't want you to be stressed out. I want you to have peace in your life. Your peace should be increasing more and more and more than your income. Now, this is exactly the type of thing that we sort through on a clarity call, which is a free call where you and I can sit down and look at what's going on with your numbers. I wanna help you get clarity on your next right financial steps. And if there's a way that I can support you further, we can talk about that. But either way, you're gonna walk away with more clarity than you came in with. All you have to do to book that clarity call is go to accelerateyourlegacy.com/claritycall or scroll down in the show notes and click on Clarity Call. You're going to click on the Are You Ready To Master Your Money question. That's the one. I want you to become a master of your money. More income should give you breathing room, not just a more expensive version of your normal. So go out and assess what's really going on with your spending and going on inside your mind, going on inside your heart. And this week, my legacy builders, I encourage you to go out and make a difference