Earn more, save less? How lifestyle creep is quietly destroying your wealth; experts on how to break free

By Admin

09 Oct, 2025

Earning more doesn’t always mean saving more   and that’s the uncomfortable truth many salaried professionals are waking up to. Despite rising incomes, a large number of individuals find their bank balances stagnant, trapped in what financial experts call the “paycheck trap.” This happens when higher earnings are quickly offset by higher expenses, driven by lifestyle upgrades, social pressure, and subtle spending habits that quietly drain wealth.

The Silent Wealth Drain

Take the example of a client of CA Abhishek Walia, who earned Rs 80,000 a month for five years. His lifestyle seemed modest   rent, groceries, EMIs, and the occasional outing. Yet, after half a decade, his savings barely grew. The issue wasn’t his income; it was how he handled it.

Each salary hike came with a spending upgrade a Rs 5,000 raise meant a new subscription, and a Rs 10,000 raise translated to a better phone or dining experience. Gradually, his expenses rose in step with his income, leaving no space for meaningful savings. This subtle but dangerous pattern, known as lifestyle creep, is a quiet wealth destroyer.

“It’s not income that builds wealth   it’s behaviour,” says Walia. “When your spending grows with every raise, your savings don’t stand a chance.”

By the end of five years, despite earning over Rs 9.6 lakh annually, his savings rate was nearly zero. Like many professionals, he was running fast   but on a financial treadmill.

What Fuels the “Paycheck Trap”?

Experts point out several factors that keep individuals stuck in this cycle:

• Higher taxes: Salary hikes often push individuals into higher tax brackets, reducing the expected take-home pay.
  
  

• Lifestyle upgrades: Raises trigger new expenses   bigger homes, gadgets, or fine dining   that erode savings.
  
  

• Long-term EMIs: Costly loans for homes or cars increase fixed commitments and restrict saving flexibility.
  
  

• Social pressures: The urge to “keep up” with peers drives spending on luxury items, events, and travel.
  
  

• Mental accounting: Treating bonuses or raises as “extra money” to spend rather than invest.
  
  

Recognising these patterns is the first step toward financial freedom.

The Fix: Automate Smart Money Habits

Instead of relying on willpower, Walia helped his client create a structured, automatic financial plan:

• 30% auto-transfer rule: The moment his salary arrived, 30% went directly into SIPs and an emergency fund.
  
  

• Two-card system: One debit card for essentials and one credit card for discretionary expenses.
  
  

• Monthly reviews: Regular checks to identify spending leaks and realign goals.
  
  

Within six months   without any salary raise   the client’s savings grew to ₹1.9 lakh. The secret wasn’t earning more, but managing better.

The Lesson: Build Wealth Through Discipline, Not Paychecks

“Wealth isn’t built on big paychecks   it’s built on discipline, intention, and consistency,” says CA Nitin Kaushik. He believes 2025 should be the year salaried Indians “play the smart money game.” His key advice includes:

• Live on half your salary and invest the rest.
  
  

• Diversify across mutual funds, gold, stocks, retirement plans, or even crypto (if understood).
  
  

• Build a second income stream.
  
  

• Secure term and health insurance early.
  
  

• Avoid lifestyle leaks and peer pressure.
  
  

As Kaushik puts it beautifully, “A Rs 70,000 vacation brings joy for a week. A Rs 70,000 SIP brings peace for life.”