Lifestyle inflation is characterized by spending more as you make more money. This proportionate increase in spending is probably the main (and relatively understated) reason why some high earners live paycheck to paycheck and get into crippling amounts of debt.

As regrettable as it sounds, receiving a higher salary does not mean having more money saved up. It seems odd, but it happens more frequently than you would expect. Just look at the people in their fifties who started earning six-figure incomes during their twenties and are financially unprepared for retirement.

You could attribute such wastefulness to living a life of luxury, indiscriminate spending habits, or maybe just a propensity for making bad decisions. At the core of these is lifestyle inflation, and it is unfortunate that many well-meaning people ruin their own financial prospects because of it.

Don’t worry, you can avoid this by doing the following things:

Be frugal. Live as if you’re broke.

2. Always stay on the lookout for more affordable alternatives that will benefit you in the long run. To illustrate: stop buying Starbucks coffee every single day and get a coffee machine instead. The coffee machine will cost you a bit in the short term, but will save you a lot in the long term. Eventually, you’ll be making coffee superior to Starbucks’ at a fraction of the cost anyway.

3. Avoid impulse buys and think all discretionary purchases through. Think thrice before buying something you don’t need.

4. “Treating yourself” should only be done occasionally. Limit celebratory spending to legitimate milestones.

Avoiding lifestyle inflation and saving up more money can do wonders for you. You can invest that money in the stock market. You can use your savings as startup capital for your business ideas. You might even have saved enough for a down payment on a house. With some self-awareness and a little discipline, the possibilities are endless.