My dear child:
The house I grew up in was 1500 square feet, and there were five of us inside it. I never once thought of it as small.
Every house I owned after that one was bigger than the last, and I never sat down and decided I needed more room. The rooms followed the money. A raise, a good year, gaining the guts to charge what I was worth. At every step I'd have told you I had earned it, and I'd have been right.
It wasn't only me. The typical new house built in the US last year came in at 2,142 square feet, and the typical household has 2.5 people in it. 600 more square footage, half a person fewer. Do the math and that's about two thirds more room each, for the same job of living. (Which is a whole extra bedroom that nobody ever sat down and decided to want.)
Some researchers followed thousands of households for sixteen years to see what more money actually does to a person. The lift is real. They also couldn't find any of it left after about four years.
FOUR years. That's the shelf life of earning more.
So the money arrives, and it's wonderful, and four years on the bigger house is just the house. You're no happier than you were the month before it came. But your life now costs what that money was worth, and there's no giving it back.
So just remember this: the house always grows to fit the money. It never shrinks to fit the savings.
You've made more money than you used to. Several times over. You've never once felt rich, and you've decided the problem is that the number still isn't big enough. But every time it got bigger you didn't get richer. You got a new floor to stand on, and it cost you the old one. That hamster wheel goes round and round if you let it.
So settle it before the next earnings bump arrives. Decide what share of the increase never touches your spending, and write the number down tonight, while the money is still imaginary and you don't want anything with it yet. Half is a fine answer. Do it now, because the week it actually lands you'll have a reason.
You don't need to make more. You just need to stop the lifestyle creep in it’s tracks.
One thing I'd tell my younger self: I never missed a single dollar I didn't spend.
From the bookshelf: The Law and the Profits" by C. Northcote Parkinson. He published it in 1960, and his second law is this whole letter in five words: expenditure rises to meet income. i.e. Lifestyle creep is a killer
A question to sit with: The last time you started earning more, what did it buy? A bigger better lifestyle? Or more savings invested?
Yours sincerely,
