Money

Why Some High Earners Still Live Paycheck to Paycheck


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  • It’s very common for lawyers making plenty of money to live paycheck to paycheck
  • Law school loans, attempting to impress others, and lifestyle inflation all contribute to living from paycheck to paycheck
  • High earners need to budget, practice self-control, and save for the future just like everyone else

Everyone is aware that the law can be a lucrative career choice and making well over six figures isn’t unusual.

But even though the money may be coming in, it might also be going out just as quickly. According to a Nielsen study, 25% of families making $150,000 a year or more are living paycheck to paycheck—a shocking state of being for an upper middle class salary. If you’re earning such a generous salary, it would make sense that you would be able to pay your bills, save some money, and take vacations. So why are some high earners not living with as much freedom as their money should afford them?

Law School is Expensive

The likelihood that many of the people you know in the legal field are still paying off their student debt is very high. According to research by nonprofit Law School Transparency, 75% of law school graduates took out loans and the average student graduates with debt that reaches about $120,000—around the same amount as a beginning lawyer’s salary. The monthly payments on such large loans are not so easy to pay off even when you’re making what is, by all accounts, “good money.”

Not making loan repayment a priority—often out of necessity—means the interest just piles on, causing even more of a problem. These loans will keep making huge dents in your paycheck for several years—over a decade, for many people.

Acting the Part

When you’re being paid a lot, you’re expected to spend it … right? Many people believe that making a generous salary means you should be showing it off. People often spend money they shouldn’t in an attempt to show others their prestige and value.

After paying for the nice apartment, fancy car, and lavish lifestyle to keep up with the Joneses, of course the six figures are going to be gone. If you’re getting paid enough to live this kind of lifestyle but don’t have enough left over to save for retirement or put a real effort into paying off those loans, you clearly need to rethink your budget. It’s a dangerous, unsustainable financial decision to spend every cent you make.

Lifestyle inflation is a common problem for those who make a higher-than-average salary, and truthfully, it can be hard to resist. As income increases, so does spending to keep up the lifestyle that is “supposed” to go with that income. So no matter how much more you earn, you never actually get to have more money, since it’s all immediately spent.

Have you experienced lifestyle inflation? What strategies can you think of to stop it?

Believing You Deserve It

You work hard—of course you want to be able to enjoy the money you make by buying nice things and experiences. All those long hours make you believe that you deserve to spend as much as you want on anything you want. But this can turn into a bad habit of justifying everything you purchase—even the unnecessary $500 shoes or $3000 watch.

Yes, you should treat yourself to nice things and reward yourself for your hard work. That does not at all mean buying everything in sight. Budget for enjoyment and things you truly appreciate, not just every impulse purchase that catches your eye. You can buy things you want and not just what you need; you just need to be smart about when and how you do so.

Thinking It Won’t Ever End

If you’re making six figures now, you’ll always make plenty of money, right? This type of thinking may lead you to spend with abandon, and to believe that saving money isn’t necessary because more will always come in. Young people making such generous salaries often believe they don’t need to think about retirement yet because they’re at the beginning of their careers.

But that may not be true. Your salary could change, you might lose your job, you may have to take an unexpected break due to your health or other circumstances beyond your control. There are many circumstances you should be saving for even if it doesn’t feel immediately necessary. Having a layer of money security is important for your near future, the long-off future, and your family’s future. Just putting a little bit of money away each month—as well as saving for retirement through a 401(k)—is a simple way to have future security while still enjoying your life.

With some common-sense budgeting and self-control, you can reign in your spending, start saving, and stop living paycheck to paycheck. Remember: It doesn’t matter if others see your wealth in the form of your possessions. What matters most is your financial security.