At $5 Million Net Worth, I Upgraded My Lifestyle: Here’s What Others Did Too

Years back, I reduced my working hours and income significantly to focus on raising my kids when they were very young. I still held down a job, but with three kids ages three and under at home and a lack of affordable childcare, it was tough to maintain a solid work schedule.

Back then, my husband and I were very frugal — mostly because we had to be. That meant we drove an old car, dined out rarely, and didn’t splurge on vacations.

In recent years, I’ve been able to work and earn a lot more than I did when my kids were young. And as a result, we have more flexibility in our household budget.

This isn’t to say that we waste money. But we have more freedom to spend on certain luxuries.

Our second car is now a nicer one, as opposed to the aging vehicle we drove for many years. And while we do plenty of cooking and eating at home, going out to dinner isn’t something we have to feel bad about.

In this Reddit post, we have someone wondering how people upgrade their lifestyles as their income and net worth increase. Having reached the $5 million mark, they decided to move from a home costing $4,000 a month to one costing twice as much.

I think there’s nothing wrong with increasing spending as your income and net worth increase. After all, I did that myself. But it’s also important to be careful.

Be wary of lifestyle creep

I think it’s perfectly find that the poster’s housing costs doubled once they became more comfortable with their financial situation. Your home is something you spend almost every day in, so it’s a worthwhile thing to upgrade. A nicer living space can directly impact your quality of life.

My husband and I opted not to upgrade our home because we didn’t want to take on that financial commitment. And also, the timing just didn’t work out.

Once our income and savings rose, the housing market started going bonkers, and home prices in our area began to soar. We decided we’d rather have more room in our budget for entertainment and conveniences, like paying for a house cleaner, rather than more square footage.

Meanwhile, some of the people who responded to the post above said they made different lifestyle changes as their wealth increased. Some bought nicer cars. Others splurged on travel experiences.

One respondent, interestingly enough, said they downgraded their lifestyle as they got richer. So it’s really a matter of priorities and what you want.

The one thing you do need to be careful of, though, is lifestyle creep. If you take on too many new expenses as your income rises, you may not get ahead financially. And you might end up with just as much money-related stress as you had when your income and net worth were much lower.

To this end, I’d say choose your upgrades wisely. If you decide a house is most important, buy a bigger one. But then maybe don’t also buy a luxury car and plan to fly everywhere first class. It’s a matter of striking a balance.

It’s best to get outside input

There’s nothing wrong with spending more once you reach a certain net worth and income level. But it’s also a good idea to get a reality check in that situation.

To that end, I’d recommend working with a financial advisor who can help you manage your spending at various stages of life. I have one myself, and he helps me balance my spending with my long-term goals, which include funding my kids’ college education and having a decent-sized nest egg for retirement.

And if you’re assuming a financial advisor will automatically tell you to minimize your spending, think again. At times, my financial advisor has actually encouraged me to spend more, and has helped me feel comfortable doing so.

The poster above might benefit from working with a professional so they’re able to enjoy life without taking on too many expenses. Plus, once your net worth reaches a certain level, the right investments could buy you a lot of financial security. So that’s yet another reason to get a professional involved.

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