The trap is the ratchet, not the purchase#
Lifestyle creep gets described as spending more when you earn more. The damaging part is that it doesn’t go backwards.
Downgrading is a perfectly logical decision that feels terrible. Moving to a smaller flat, cancelling the holiday, going back to cooking — none of it is objectively hard, and all of it registers as loss. Loss aversion means the pain of giving something up is roughly twice the pleasure of getting it, so the upgrade you enjoyed for a month costs double to reverse.
Which means the moment to be careful is at the upgrade, not at the point where you realise it’s unaffordable. That’s a decision made once, permanently, on a raise you were pleased about.
One person’s version: over $120,000 in student loans at graduation, an immediate move to a big city alone to escape roommates, and a wardrobe purchased to match a salary that was already spoken for. From outside it looked composed. It was six figures of debt with new clothes on top. Getting out required stopping shopping, holidays and takeaway entirely — described as a genuine withdrawal period, because that’s what breaking a spending pattern feels like.
One purchase is never one purchase#
The Diderot Effect explains why upgrades cluster. Denis Diderot, an 18th-century French writer, came into money and bought a beautiful scarlet dressing gown. Against it, everything else in his study looked shabby — so he replaced the rug, then the chair, then the art, then the sculptures. He ended up back in debt, and wrote an essay about it.
The mechanism is that possessions are judged relative to each other. A new sofa doesn’t sit in isolation; it makes the coffee table look wrong. Nice trainers make the rest of the outfit look tired.
So the real price of a purchase isn’t its price. It’s the price plus everything it makes look inadequate. Which is why “I’ll just get the one nice thing” reliably becomes a redecoration.
The practical counter is a constraint: any new purchase has to work with what you already own. If it demands companions, it’s more expensive than the tag says.
The treadmill makes the display pointless#
Hedonic adaptation is the reason status spending is what one might fairly call spending to nowhere. Every success becomes the new baseline quickly. The raise becomes your salary; the car becomes the car you drive; the flat becomes where you live. The happiness from any purchase fades back toward where it started, which is what generates the next purchase.
This isn’t an argument against ever buying anything nice. It’s an argument against buying nice things to feel a certain way, because the feeling has a documented half-life and the payments don’t.
The most useful version of this: a $500 shopping day, followed hours later by a scratched car and genuine panic about the repair bill. The $500 spent to impress people who weren’t watching produced no hesitation. The unavoidable expense produced dread. Same money, opposite reactions, because one was chosen and one was measured.
What money actually buys#
Reframe the purpose and the spending decisions reorganise themselves. Money buys two things worth having: freedom and flexibility.
Concretely, that means buying back time. Editing one video might take up to 40 hours; hiring an editor converts money into hours that can produce more income or go to family. That’s a transaction with a compounding return, unlike a purchase with a resale value.
The research supports this more strongly than most spending advice. Whillans and colleagues, publishing in PNAS in 2017, surveyed over 6,000 adults across four countries and found that spending money on time-saving services predicted greater life satisfaction — and that working adults reported more happiness after a time-saving purchase than after a material one, controlling for income.
The striking part is how rarely anyone does it. In a sample of 850 millionaires, almost half reported spending nothing on outsourcing disliked tasks. Asked how they’d spend a $40 windfall, only 2% of working adults chose something that saved time.
There’s a large, evidence-backed, underused category of spending sitting right there, and it isn’t a handbag.
The FU fund#
The other thing money buys is the ability to leave. A toxic job, a bad relationship, a city that isn’t working. That optionality is the actual product, and it only exists if the money isn’t already committed to a lifestyle.
Morgan Housel’s line in The Psychology of Money captures the trade: wealth is not what you want, it’s what you have. The car you didn’t buy is the wealth. The car you did buy is the car.
Summary — and what to do about it#
Upgrade slowly, if at all, and decouple spending from what anyone else sees.
- Hold your standard of living flat through the next raise. Route the increase to debt and investing before you adapt to it.
- Apply the compatibility test. If a purchase makes other things look wrong, price the whole chain before buying.
- Treat upgrades as irreversible. Reversing one costs about twice what enjoying it paid.
- Buy time deliberately. The evidence for time-saving purchases is strong and almost nobody acts on it.
- Build the FU fund. Freedom and flexibility are the only things money buys that don’t adapt away.
- Define “enough” and write it down. Undefined, it moves with every success.
Nobody is watching closely enough to justify the cost of being watched. Let the money compound instead of the image.
Sources & further reading#
- Whillans et al., “Buying time promotes happiness,” PNAS (2017) — time-saving purchases predict greater life satisfaction than material ones.
- ScienceDaily on the same study — how rarely people, including millionaires, buy time.
- BehavioralEconomics.com on loss aversion — why reversing an upgrade hurts more than making it felt good.
- Knowledge at Wharton, “Does Money Buy Happiness?” — adaptation and where additional income stops helping.
