Money Myths: The More You Make, The More You Spend

spend up to your level of incomeI remember my days back when I was about 7 or 8 years old.  I started my own business, so to speak, cutting grass in the neighborhood. I had just finished cutting a neighbor’s grass, and life was just grand.  There was the smell of fresh cut grass in the air (what could ever be wrong with that?) and I had a fresh $3 in my pocket.  Yes, back in those days, my going rate was the whopping sum of $3 per yard.  It took me about an hour per yard.  And that $3 in my pocket made me about the happiest kid on the block.

Obviously, at that point in time, I had no expenses.  So, the only thing that ever came to my mind after cutting each and every yard was one thing and one thing only:  Baseball cards. I was a fanatic to no end. I collected every single year, and I couldn’t get enough of them.  I had to complete my set each year, and it really didn’t matter how much I had to spend to get my complete set.

Each yard I cut meant another walk down to the local grocery store for more packs of cards.  The process, in my mind, was simple.  The more grass I cut, the more money I made.  The more money I made, the more baseball cards I could buy.

It was a very rational mantra to live by as an eight year old.  Many years later, and after many discussions with people about money, a certain theory has always popped up in the conversation.  I have no idea if there is a technical name for it, but basically, it involves spending up to your level of income.  What it means is that as you make more money; you will naturally spend your money, and therefore never REALLY get ahead.  As I hear this theory discussed, it is talked about like it cannot be helped and is simply a part of human nature.

How wrong can that be?

I mean, seriously.  Are we all that mindless and stupid?  Have we no will power to stop the endless flow of dollars out of our wallets?  Is it simply impossible to get ahead or to save for the future?

The answer is a resounding “no.”  Other than eight year olds who cut grass for a living and buy baseball cards, this is the dumbest idea I have ever heard.  It most certainly is possible to keep your spending in check as your income rises, and is a fantastic way to plan and save for your future.  I mean, why wouldn’t you?  For most, as soon as you see your level of income rise, I’m sure your initial reaction or urge is to go out and spend some of it.  After all, you deserve it, right?  My recommendation is to simply put off this urge until you get a few other things accomplished.

In the year 2000, my annual salary was roughly $40,000. I was a manager at a restaurant.  I did not live paycheck to paycheck, but I was by no means ahead of the game.  I paid my bills each month and had a little left over at the end.  I had no real savings, no 401K, and no plan for the future.

Over the course of the next three years, my income rose to approximately $50,000 per year. Having never heard of this hypothesis of spending up to my level of income during those three years, I did a very good job of keeping my spending in check.  The results?  Briefly:

  • I paid off the very last of all of my debts and was completely out of debt other than my home mortgage.
  • I started, and was able to maintain a 401K plan with a 5% contribution from each paycheck.
  • I had right around $10,000 in the bank. At the time, I was very much into international travel.  Using a portion of this $10,000 allowed me to take two trips to Russia and one trip to Paris.
  • I started a Roth IRA and contributed at least $3,000 annually.

This idea of spending up to your level of income is a self-fulfilling prophecy.  If you think that is what will happen, then of course, it will. Better yet, why not put a hold on your spending during these times when your income is increasing.  Rather than spending it as it comes in, why not build it up, set some aside for your future, and then decide what to do with the rest. You may be able to afford all the baseball cards in the world, but you’ll be cutting grass in the neighborhood for the rest of your life.

As always, your comments and suggestions are appreciated below.

(photo credit: krynsky)

  • Stephan

    agree with you 100%. its all about self control, not about how much money you make. If you know how to handle and save when making 30k a year, there is no reason you shouldnt be able to do that when making 100k a year.

    • David/


      Self control is the name of the game. By no means do I advocate hoarding all your money for a “rainy day” that never comes, but a little restraint can go a long way.

      Thanks for commenting!

  • Matt Butensky

    I have to agree with your advice here. It seems to that putting a stop on spending when you income is increasing might be wise. After all, will that be increase continue for forever? But, the key to saving is really making the most out of your time and when you do that…you tend to make more money in the long run.

    • David


      You bring up a couple of good points. I received a substantial raise in the beginning of 2008, only to see it and more evaporate before my very eyes in less than a year! Beofre I knew it, I had taken almost a 28% pay cut!

      That was a tough adjustment, and I had kept my spending in check. Its a good thing I did.

      And your comments about time utilization is right on point.

  • Jackie

    We definitely don’t have to increase our spending in lockstep with an increase in income. In fact an increase in income is a great opportunity for a completely painless increase in savings and investing. We’re all responsible for our own success.

    • David


      Love your quote about success. We are also, unfortunately, responsible for our own failures–that is, there is no one else to blame them on. Finanicialy speaking, anyways.

      Thanks for stopping by.

  • Craig

    Depends the person, everyone is different, but I think naturally people who make more tend to spend more on little things like going out to eat.

    • David


      You’re absolutely right. Bt those little things can add up if they are not monitored in some way, shape or form.

      Certainly increases in income can and should be celebrated, but within reason.


  • Qt

    As in my family we sum it up: why eat caviar only because you have the money to buy it… especially if you don’t like it ?

  • David


    Great to see you over here—I am sure your wit and wisdom will be a welcome addition to the comments.

    Couldn’t agree with you more—and I hate caviar!