The couple moved from South America to Melbourne three years ago where they enjoyed cheap rent and a quieter social life. But a recent move to Sydney has seen that change dramatically. Photo / 123RF
The couple moved from South America to Melbourne three years ago where they enjoyed cheap rent and a quieter social life. But a recent move to Sydney has seen that change dramatically. Photo / 123RF
Doubling your income to six figures might sound like a great idea, but this couple feels poorer than ever — and it has a lot to do with Sydney.
Alfonso* and his wife increased their combined salary of A$60,000 (NZ$65,500) to a cool A150,000 (NZ$164,000) in the last fourmonths. But the 37-year-old said making a higher income had put more financial strain on the relationship than ever before.
The couple moved from South America to Melbourne three years ago where they enjoyed cheap rent and a quieter social life. But a recent move to Sydney has seen that change dramatically.
Alfonso said his rent had increased by A$140 (NZ$153) a week to a total of A$600 (NZ$655) for an apartment in Alexandria. Being closer to friends and family, their weekly social spend has also doubled.
Alfonso, who asked to remain anonymous, told news.com.au it was very different in Melbourne.
"On a smaller income in Melbourne, we were supporting ourselves well for two years," he said.
"We weren't spending too much on friends and family. We didn't know anyone in Melbourne, so our social life was relaxed and we didn't do too many things on the weekend, so we weren't spending."
(Australian currency). Graphic / news.com.au
It may be tempting to increase your standard of living when you start to earn more, but author Tom C. Corley said it was one of the worst things people could do.
"[Spending more] is a bad habit," Mr Corley, author of Rich Habits: The Daily Success Habits of Wealthy Individuals, told Business Insider.
"The good habit — I call it the 'Rich Habit' — is to forgo the desire to spend your money today and, instead, sock it away into savings and investments that grow in value and provide financial resources that can be used in the future to maintain your standard of living."
Ultimately, according to Mr Corley, when you come into a higher income, you should try and live below your means.
"Same house, same spouse, same car," he said.
Debt-repayment expert Rod Ebrahimi said one of the biggest problems he saw with people who either received a bonus, inherited money or got a payrise was to overdo the spending.
"Don't adjust your lifestyle expectations upwards just because you now have a higher income," he explained to LifeHacker.
"If you do, you'll risk falling victim to the hedonic treadmill and you'll miss out on a wonderful opportunity to solidify your financial security for the future."
Since landing an increased wage, Alfonso said most aspects of his life had increased. From groceries to alcohol, dining out and even car expenses, he said his salary seemed to slip away as soon as his monthly pay arrived.
"The main issue is that we spend every single day now," he said.
"I will buy some vitamins or something for the dog, maybe something for the house. I wouldn't say we like spending on fancy things, but we do spend every day.
"Because of this, my savings just won't grow, but I know we don't keep a good track of what is happening with our money."
Financial expert Ramit Sethi of I Will Teach You To Be Rich, told LifeHacker that while people should continue to monitor their savings as their income grows, they should be allowed to spend a percentage more each month.
"A lot of experts will say 'take every dollar you're earning now and put it in the bank'," he said.
"That's not practical. The hedonic treadmill is real; if you make more, it's OK to spend more. "If you try to deny yourself as you make more, that's a recipe for blowing up. Take a percentage of what you make, put it into guilt-free spending and enjoy it."
