If Notorious B.I.G. didn’t make it in the hip-hop scene, he could have had a decent shot as a behavioral economist. In 2017, 9% of Americans earning over $100,000 still live paycheck to paycheck. Unfortunately, making more money is unlikely to solve your financial woes the way you think. While it might sound counterintuitive, increased income is often outpaced by an increased spending. This concept, called lifestyle inflation, is how Nicolas Cage, one of the highest paid Hollywood Actors of all time, went completely broke.

Lifestyle inflation is particularly dangerous for freelancers with a volatile income stream. Picture this – Sam is a freelance bassist in Seattle. She pieces together a modest living through a combination of teaching and performing. Unfortunately, one of the bassist in the Seattle Symphony is injured part way through the season. Because of this, Sam gets a call to play 9 consecutive weeks with the symphony and as a result makes a significant amount more money than she usually does. Because her schedule is busier she doesn’t have as much time to cook, so she starts to eat out a little more often. That extra income makes her feel comfortable upgrading to a gym with more amenities. Soon enough her significant increase in income is gone, and with work slowing down Sam will soon realize she is living beyond her means.

It’s easy to see how freelancers can be susceptible to the hills and valleys of lifestyle inflation. But not all instances of lifestyle inflation are this obvious. In fact, changes tend to be quite inconspicuous in the short term. However, viewed in the long term it may be more evident. Take a moment to compare your current spending habits to that of your 21-year-old self. You likely shed some of your more frugal habits, moved into a slightly nicer apartment, or upgraded your car. At the time, many of these changes were cloaked in a feeling of necessity or ease. They were easily justifiable expenses. But in the long run they drastically changed the baseline of your normal spending.

Of course, this is not to say that increasing the quality of your lifestyle is a bad thing – improving our quality of life is a large part of the reason we work so hard. It is completely unavoidable, but it is important to be sure that it never comes close to outpacing your wealth.

- Here are some quick tips to manage lifestyle inflation -

1) Pay yourself first – immediately put aside a set percentage of every paycheck into a combination of retirement accounts and emergency accounts.

2) Plan ahead - know how you will allocate your money before it hits your bank account.

3) Reward yourself - without spending unconsciously.

4) Train your delayed gratification reflex – compare a lifestyle increase to its investment worth. (ex. An HBO subscription is a $14.99/month expense, or $179.88 per year. At 25, if I invested that same amount every year at a 7% average return until I’m 65 I’ll end up with a return of $38,603.)

Mo’ Money Mo’ Problems - Fighting Lifestyle Inflation