The raise that vanishes by the end of the month
Lifestyle inflation — also called lifestyle creep — is the mechanism by which spending rises proportionally to, or faster than, income. A €500 pay rise doesn't land in a savings account. It lands in a better flat, a newer phone, pricier lunches, and subscriptions you didn't "need" before. According to a Goldman Sachs survey (2025), 40% of people earning over $300,000 per year report living paycheck to paycheck.
A scenario you might recognise
Someone earns €2,800 net per month. At the end of each month, €100 remains. They get a raise — now earning €3,600. Three months later, at the end of the month… €120 remains. A better flat (+€350), eating out more often (+€250), a car lease (+€300), two new subscriptions (+€80). None of these decisions seemed unreasonable. Each one sounded like "I can finally afford this." Together — they consumed the entire raise.
This isn't a story about lack of discipline. It's a story about a mechanism that affects everyone — regardless of income, education, or intelligence. According to PYMNTS (2024), nearly half of Americans earning over $100,000 per year live paycheck to paycheck.
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From the founder
When my income doubled over two years, I was convinced I'd finally start saving. I didn't. Spending caught up with income within months. It was only when I saw it on a chart — two lines rising in parallel — that I understood the problem wasn't the number on my payslip. The problem was in my head.
Why this is hard — and no, it's not about willpower
Hedonic adaptation is the brain's ability to adjust to new circumstances — both positive and negative — and return to a baseline level of satisfaction. The term "hedonic treadmill" was introduced by psychologists Philip Brickman and Donald T. Campbell in 1971.
What is hedonic adaptation?
Hedonic adaptation is a psychological mechanism in which people quickly return to a baseline level of happiness after positive or negative life events. The term was proposed by Brickman and Campbell (1971). In a landmark 1978 study, Brickman, Coates, and Janoff-Bulman found that lottery winners were not significantly happier than a control group — and derived less pleasure from everyday activities. Published in the Journal of Personality and Social Psychology.
If winning the lottery doesn't produce lasting happiness — a €500 pay rise won't either. The brain adjusts to the new income level within weeks. The new standard becomes the new "normal." And anything below the new normal starts to feel like a loss.
It's not laziness. It's not a lack of discipline. It's neurology. And it applies to literally everyone.
Salaries rise, savings don't
Sources: Goldman Sachs 2025, PYMNTS 2024
How does the hedonic treadmill work — and why can't you step off?
The hedonic treadmill is a metaphor for a mechanism in which you run faster and faster but stay in the same place. You get a raise — satisfaction rises briefly, then returns to baseline. You buy a new car — joy lasts a few weeks, then it becomes background noise. According to a study by Emmerling and Qari (2017), published in the Journal of Economic Psychology, roughly one third of the initial happiness increase from buying a car disappears within five years.
Why do possessions bring shorter joy than experiences?
Research by Van Boven and Gilovich (2003) at Cornell University, published in the Journal of Personality and Social Psychology, showed that material purchases are subject to faster hedonic adaptation than experiences. A new phone brings joy for 2–3 weeks. A travel memory — for years. Material purchases invite comparisons with others (your neighbour's car is nicer), while experiences become part of your identity.
This is why lifestyle inflation is so insidious. You don't make one big purchase. You make dozens of "small upgrades" — better coffee, a pricier lunch, a newer phone every year — each of which brings brief pleasure and quickly becomes the new minimum.
You see what you earn. But do you see where it goes?
Martia connects to your bank and shows all your spending in one place — automatically categorised. See what's eating your raises.
What is the Diderot Effect — and why does one purchase lead to ten?
The Diderot Effect is the phenomenon in which acquiring one new item triggers a cascade of further purchases — you unconsciously strive to "match" everything to the new standard. The term was coined by anthropologist Grant McCracken (1988), based on an essay by French philosopher Denis Diderot from 1769.
What is the Diderot Effect?
The Diderot Effect is a phenomenon in which acquiring one item triggers a spiral of consumption — the new item makes existing possessions feel inadequate, so you replace them. Named after philosopher Denis Diderot, who in a 1769 essay described how a gifted scarlet dressing gown led him to gradually replace all the furniture, chairs, and paintings in his study — because they "didn't match" the new robe. The term was introduced by Grant McCracken in Culture and Consumption (1988).
The modern version: you buy a new iPhone. The old case doesn't fit — you buy a new one. The old earphones "don't sound as good" with the new phone — you buy AirPods. The old car mount doesn't hold — you get a new one. A €1,200 decision turned into €1,800. Not because you're wasteful. Because the brain seeks consistency in its environment.
The Diderot Effect compounds with emotional spending — purchases driven by feelings. When the new item stops bringing joy (hedonic adaptation) and old possessions don't match it (Diderot Effect), the spiral accelerates. And the only person who doesn't know what it costs is the one paying.
Does earning more actually solve financial problems?
The relationship between income and happiness has been studied by some of the most prominent psychologists of our time. The results aren't what most people expect.
Myth vs. reality
Myth: "Once I earn more, I'll finally start saving. The problem will solve itself."
Reality: In a landmark study, Kahneman and Deaton (2010), published in Proceedings of the National Academy of Sciences, showed that day-to-day emotional well-being stops rising beyond an income of approximately $75,000 per year. A more recent study by Killingsworth, Kahneman, and Mellers (2023) in PNAS refined this: the plateau applies only to the unhappiest 20% of people. For the rest, well-being continues to rise with income — but more slowly than expected. No study has found evidence that higher income automatically leads to higher savings.
Let's be honest. If you've been telling yourself "I'll start saving when I get a raise" for three years — and you've had three raises since — the problem isn't the number on your payslip. The problem is a system you don't have. Or, more likely, something you can't see in your spending.
More money doesn't solve money problems. Awareness does. The ostrich effect — avoiding looking at your finances — works in both directions: whether you earn little or a lot. Same mechanism. Different stakes.
How to break the lifestyle inflation cycle — concrete steps
Breaking the lifestyle inflation cycle starts with one decision: deciding what you'll do with your next raise BEFORE you get it. Not after. Before. Because after the raise, your brain is already planning how to spend it.
The Martia Conscious Raise Method
The Conscious Raise Method means setting up an automatic transfer to a savings account on the day of your raise, for at least 50% of the difference between your new and old salary. If your raise is €500 net — a minimum of €250 goes to a separate account automatically, before you have the chance to spend it. The remaining €250 is your real raise to use freely. The rule: never let 100% of a raise enter your everyday spending.
Step 1: See what you actually spend
You can't fight what you can't see. The first step is seeing the full picture of your spending over the last 3 months. Controlling your household budget is the foundation. The goal isn't to spend less. It's to know what you spend on.
Step 2: Identify the "silent thieves"
Lifestyle inflation rarely arrives as one big decision. It comes as twenty small ones. A pricier lunch (+€8/day = +€160/month). A third streaming subscription (+€15/month). Coffee out instead of at home (+€100/month). Each looks trivial on its own. Together — that's €275 per month. €3,300 per year. Money that could be savings.
Step 3: Apply the 48-hour rule
For every purchase over €50 — wait 48 hours. Not "don't buy." Wait. If after two days you still want it — buy it. It's estimated that a significant portion of buying desire fades within 24–72 hours. That's hedonic adaptation working in your favour: the excitement about a new product fades before you pay.
Step 4: Compare yourself to yourself, not to others
The Diderot Effect feeds on comparisons. A colleague gets a new car — you start looking at yours differently. A friend renovates their kitchen — yours suddenly looks worse. The only healthy comparison is: "Am I in a better financial position than a year ago?" If yes — you're on track. If not — you know what to change.
How much of your last raise is still in your account?
Martia shows how your spending changes over time. See whether your raise ended up in savings — or in lifestyle inflation.
What tools help control lifestyle inflation?
Fighting lifestyle inflation starts with one thing: seeing what changed. Not "how much do I earn" — you know that. But "how much am I spending in categories where I spent less a year ago." The difference between those two numbers is your lifestyle inflation in euros.
Apps like Martia connect to your bank and automatically categorise spending. No manual entry required. But the most important thing is what you see: a month-over-month spending chart, category by category. If in March you're spending €500 on dining out, and a year ago it was €250 — you know where your raise went. No moralising. No judgement. Data.
If you're not ready for an app, start with a simple Google Sheets spreadsheet. Track spending for one month. Even this basic tool will open your eyes. But if you prefer data to come to you automatically — spending trackers save time and reveal trends you'd never spot in a spreadsheet.
The problem with lifestyle inflation isn't that you spend too much. The problem is that you don't know you're spending more. And when you don't know, you can't consciously decide what to do about it. Whether you spend €500 on dining out is your call. What matters is that you know — rather than finding out by accident.
Sources and references
- Brickman, P. and Campbell, D.T. (1971), Hedonic Relativism and Planning the Good Society, in: M. H. Appley (ed.), Adaptation-Level Theory, Academic Press
- Brickman, P., Coates, D. and Janoff-Bulman, R. (1978), Lottery Winners and Accident Victims: Is Happiness Relative?, Journal of Personality and Social Psychology, 36(8), pubmed.ncbi.nlm.nih.gov
- Kahneman, D. and Deaton, A. (2010), High income improves evaluation of life but not emotional well-being, PNAS, 107(38), pubmed.ncbi.nlm.nih.gov
- Killingsworth, M.A., Kahneman, D. and Mellers, B. (2023), Income and emotional well-being: A conflict resolved, PNAS, 120(10), pnas.org
- Van Boven, L. and Gilovich, T. (2003), To Do or to Have? That Is the Question, Journal of Personality and Social Psychology, 85(6), pubmed.ncbi.nlm.nih.gov
- Emmerling, J. and Qari, S. (2017), Car ownership and hedonic adaptation, Journal of Economic Psychology, 61, diw.de
- McCracken, G. (1988), Diderot Unities and the Diderot Effect, in: Culture and Consumption, Indiana University Press
- Goldman Sachs Asset Management (2025), New Economics of Retirement, am.gs.com
- PYMNTS (2024), New Reality Check: The Paycheck-to-Paycheck Report, pymnts.com
- Eurostat, Housing in Europe — 2025 interactive edition, ec.europa.eu
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