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Some folks can never get ahead and part of their problem might be "lifestyle inflation."
Investopedia defines lifestyle inflation as "increasing your spending when your income goes up."
Instead of applying that extra money to paying down debt or to saving more for retirement, some people spend the added income on their lifestyle: "Lifestyle inflation is what causes people to get stuck in the rat race of working just to pay the bills," Investopedia explains.
Miranda Marquit wrote at Free From Broke that lifestyle inflation can "destroy all of the benefits that come with a higher income."
"Often, lifestyle inflation manifests itself in eating out more, buying more things, and 'upgrading' various belongings, from the furniture to the car to the types of clothes you wear," she wrote. "Lifestyle inflation might also include experiences that you now feel that you can afford, from trips to the spa, to more expensive vacations, to costly gym memberships."
Marquit refers to an article in The Atlantic that found the percentages of income going to various categories stays about the same regardless of how much people make.
"I was surprised at how similar the spending across various categories is, regardless of income," she wrote. "When you consider the data, the indication is that many Americans aren't saving money when they see an increase in income; instead, they are likely to spend it by purchasing bigger houses and nicer cars."
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