Aspiration Creep: Why Earning More Doesn’t Always Make Us Feel Richer
There is a strange phenomenon that happens to many of us as we move through our careers.
We earn more money. Sometimes considerably more money. And yet, somehow, we don’t feel particularly richer. Think back to your first proper salary. If somebody had told you then what you would be earning today, there’s a decent chance you would have thought: I’ll be absolutely flying.
Except here you are. The salary has increased. The standard of living has probably increased. But the feeling of having “enough” hasn’t necessarily moved with it. For years, we’ve called this lifestyle creep – the idea that as our income increases, our spending gradually increases alongside it. I think we’re describing the symptom rather than the cause.
What we’re actually experiencing is aspiration creep.
Lifestyle creep is when your spending increases. Aspiration creep is when your definition of enough increases.
The goalposts keep moving
When you’re younger, perhaps the aspiration is simply to own a home. Eventually you buy one. A few years later, though, the house that once represented success can start to feel a little small. Maybe we’d like another bedroom. A bigger garden. A nicer area. A home office. A kitchen extension.
The same thing happens with cars, holidays, restaurants, clothes, weddings.
Even the opportunities and experiences we want to provide for our children. None of these aspirations is inherently wrong. In fact, aspiration is overwhelmingly a good thing. It motivates us to work, build careers, start businesses and create better lives for our families.
The problem begins when the finish line moves at exactly the same speed as we do.
Keeping up with everyone
There is also something different about aspiration today. Our grandparents had to keep up with the Joneses. We’re trying to keep up with everyone we’ve ever met – and thousands of people we’ve never met.
Instagram and social media have dramatically expanded the group against which we compare ourselves. Thirty years ago, you might have known what car your neighbour drove or where your colleague went on holiday. Today, before breakfast, you can see somebody’s renovated kitchen in Ranelagh, somebody else’s family skiing in Austria and another person’s weekend in New York.
And, of course, we’re generally seeing the highlights. Nobody posts a photograph of the direct debit leaving their account. We see the new car, not the monthly repayment. We see the extension, not the mortgage. We see the Maldives, not the credit-card statement. Eventually, things that would once have felt luxurious can start to feel remarkably normal.
That’s where aspiration creep gets expensive.
The €80,000 lifestyle
Imagine somebody earning €50,000 a year. They think: If I could just get to €70,000 or €80,000, I’d have plenty of money. Eventually they do. But something else has happened along the way.
They now have an €80,000 lifestyle. The car is better. The holidays are better. The children are doing more activities. The restaurants have improved. Perhaps the house has changed. Individually, none of those decisions seems unreasonable. Collectively, however, they can consume almost every increase in income we achieve.
And that’s why somebody can be objectively far better off than they were ten years ago while subjectively feeling almost exactly the same.
Give your future self a pay rise
So what’s the answer? It certainly isn’t to stop enjoying your money.
There’s little point working hard, progressing in your career and increasing your income if you’re terrified to spend any of it. A useful rule of thumb is the old 50/30/20 rule: around 50% of take-home income towards needs, 30% towards wants and 20% towards your future – saving, investing, pensions or reducing debt. I’m less interested in whether somebody hits those exact percentages than in one particular question:
As your income increases, does that final 20% increase too?
Because aspiration creep happens when the 30% gets first dibs on every pay rise.
Financial progress happens when the 20% does. If your take-home pay increases by €500 a month, there’s nothing wrong with enjoying some of it. Go to the better restaurant. Upgrade the holiday. Do something nice with the kids. But don’t allow your lifestyle to quietly absorb all €500 before you’ve even noticed the pay rise arrived. Give some of the increase to the person you’re going to be in ten or twenty years.
Whose aspiration is it anyway?
There is one question I think is worth asking before any significant discretionary purchase:
If nobody else could see this, would I still want it?
- Would I want this car if nobody knew what I drove?
- Would I choose this holiday if I couldn’t post a photograph of it?
- Would I need this kitchen if I’d never seen somebody else’s?
Sometimes the answer will be an emphatic yes. Great. Spend the money and enjoy it. But occasionally the question exposes something uncomfortable.
We’re not buying something because it will meaningfully improve our lives. We’re buying it because our perception of what a successful life should look like has changed. There is nothing wrong with aspiration. The challenge is making sure the aspirations we’re financing are actually our own.
Because earning more money should eventually buy us something far more valuable than simply more expensive things.
It should buy us choices, security & time
And ultimately, the freedom to decide when we finally have enough.
Robert
