Does Income Change Who You Are as a Spender? or your Tastes?

Does Income Change Who You Are as a Spender? or your Tastes?

When The Wife and I normally go away, we keep to the all inclusive resorts out of the country.  Why? Well I have been known to drink a few cocktails and we just like to not have to worry about any sort of bill at the end of our trip.  However, when we were planning our trip this year, we decided that we wanted to stay in the country and we weren’t going to be partying that much since The Wife is 15 weeks pregnant (go ahead take a look at The Wife’s bump).  So we decided to leave it up to our travel agent, who recommended that we check out Sarasota, Florida.

I agreed right away, but was a little hesitant when he said the hotel he was booking for us was The Ritz Carlton; I am definitely not that much of “a baller.”  As I spent way more than I was ok with for lunch and cut my drinks to a tenth of what I normally would drink on vacation (especially since I am drinking for two now) – I thought to myself, if I made 3 times the amount that I do now, would I order those other 9 drinks that cost $11/drink? What about if I made 10 times the amount?

What is Lifestyle Inflation?

If I had to define Lifestyle Inflation it would be the increase in spending due directly to the increase of income.  There are plenty of posts on how to avoid it, why you should avoid it, or there are those that actually appreciate lifestyle inflation (to a point).  Like most things associated with personal finance, I’d find myself in the middle somewhere, liking that I can afford some extras, but careful that I don’t try to keep up with the jonses.

At the same time, I often find myself in front of the beer selection where I have to choose between 6 good beers or 18 alright beers.  The 18 usually wins out, which leads me to the real question of this post.

Do Your Tastes Change As you Make More Money?

After the 3rd day of a $60 lunch, The Wife and I decided it was time to get out of the hotel/resort and grab us some normal lunch at a fast food place!

So I ask Does the amount of money you make determine your tastes?  If I made $500K would I care about spending another $60 at lunch? Even if I made $500K/yr can’t I still like the cheaper option?

The other night I asked at dinner (yeah I brought this up don’t make fun!) what level of income do you need to rock out a Ferrari? Even if I followed Financial Samurai’s one-tenth rule when it comes to automobiles, if I made $2,500,000 would I buy a $250,000 car, or would I think that is crazy to pay that for a car?!

What say you? Do you think our tastes change when we make more money?

11 Responses to Does Income Change Who You Are as a Spender? or your Tastes?

  1. E-Dog, I can tell you straight up that your tastes change with more money. When you have more money, you want to buy LESS junk. Instead, you’ll have more expensive, higher quality items.

    As for food, you will still feel guilty spending $30/person for lunch if you are making $500k/year b/c you realize you can easily have a kick arse In N Out burger for $2.50!

    Best,

    Sam

  2. Oh yeah, I’m pretty certain if you’ve always wanted a Ferarri, and started making $2.5 million a year, it wouldn’t feel NEARLY as absurd as if you were only making $500,000/yr. IF you believe your $2.5 million is STABLE income, then you’d definitely buy it b/c after 12 months, you’ll get another $2.5 mil! It ain’t a one time go, where the Ferrari is!

  3. Hmmm, I’m pretty sure I would spend a little bit more.

    It depends on if your are into your money make you more money or not. If you are in debt already, then yes if you make more money, then you probably spend more money. But if you are frugal, then you will keep becoming richer while just increasing your spending a little bit.

    So say I! :)

  4. Captain Awesome, huh? ;) Congrats to you and the wife with a baby on the way. And nice to put a face with the name.

    And my taste would change, but in a good way. Since I worked hard for building the money pile, I think I would put considerably more thought into the quality of purchases I make. Not buy so much junk. Drink wise.. Ah, I’d probably be able to buy the real Vodka instead of the house stuff. It’s 1 good drink over buying 2 of the crappy stuff. Lol.

    • Uh oh I hope I didn’t dissapoint! As for the name, I didn’t want her using Evan on her site…so she told me to make up a nickname and that was the first thing that popped into my mind.

  5. Well, y’know… I don’t think your tastes change (that is, what you think is attractive, desirable, appropriate, whatever). But I do think that spending tends to expand to fill all the earnings available.

    Unfortunately, over the past couple of decades expanded a bit beyond earnings for too many of us. ;-)

    IMHO it’s important to recognize that as you earn more, you’re still free to choose to live below your means. “Nice but not gaudy” defines taste. At least, it does for Old Money.

  6. Tastes may change, but not on throw-away stuff like meals. $60 lunches would just make me feel bad for spending that much, no matter my income. I’m usually disappointed when we go out for a meal at a sit down restaurant anyway. Give me Panera Bread or Qdoba any day.

  7. With more wealth, I’ve found that my taste for work has changed and my taste for earning more money, but that was probably not what you were asking about :-) … my taste for stuff/acquisition has remained pretty much the same despite tripling my income and then subsequently reducing it by a factor 10.

  8. I would think in most cases more income should change your spending habits. Unless your tastes are so far below your income that additional income makes no difference then it should. I save money for retirement, emergency fund, an addition to my house… If I have another $50,000 a year I can think of good ways to spend it (for me I would save lots of it, but I could also spend some). I am basically a saver not a spender and that wouldn’t change but if now I think I can give $50 to some charity I might give $500 if I have a bunch more money. I buy Odwalla juice which is pretty crazy expensive but in an overall budget doesn’t amount to much given my current situation. But in my first few years of work life I wouldn’t have. I’d probably buy a solar energy system and battery backup if I had a ton of extra cash… So yeah I would definitely change my spending habits. It isn’t really changing my tastes. I have the tastes now, I just figure given my financial situation it isn’t worth the money for some things. But if I had a bunch more money I would buy them.

  9. If my income tripled tomorrow, I’d still shop at target and walmart, and look for bargains at garage sales. Id keep my paid for truck, my $15/month internet… my cell phone that costs me $26 every 3 months… only thing that would change is I could finally get debt free, save, and give a bit more. I would not upgrade a thing. I would live as cheap as I could and avoid debt. :)

  10. I would spend more. With more money comes a nicer house, although not everything is proportional. I’ve never cared about having a nice car, so that’s not something I’ll suddenly desire. But I will buy nicer meat, enjoy more of the things I love.

    As it is, I go to a baseball game once or twice a year. If I was making a lot more money, maybe I’d spring for season tickets? I don’t see why not!

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