It’s a funny thing, really. You land that dream job, your paycheck is bigger than you ever imagined, and yet, somehow, at the end of the month, your bank account looks disturbingly empty. You’d think that earning an above-average salary would automatically make you financially secure, but that’s far from the truth. Sometimes people with high incomes end up just as broke as those struggling on minimum wage.
As it turns out, there are plenty of ways to make a comfortable salary disappear faster than you can say “payday.” It’s not just about spending recklessly, though that’s definitely part of it, it’s about how subtle habits and lifestyle choices can eat away at even the most generous paycheck. If you’ve ever heard people say, “I don’t know where my money goes,” after doing a bit of research, we can confidently say we know exactly where it goes.
So, here are 16 ways you can drain your bank account while earning an above-average salary—consider this your guide on what not to do if you want to stay financially afloat.
1. Lifestyle Inflation
The more you earn, the more you spend, this is what’s known as lifestyle inflation. When that paycheck grows, suddenly your apartment doesn’t feel big enough, your car feels outdated, and dining out becomes a regular habit.
The problem with lifestyle inflation is that it can creep up on you. Without realizing it, you start spending more to “match” your income, but those extra expenses chip away at your account balance quickly. Earning more doesn’t mean saving more if you let your lifestyle inflate with every raise.
2. Racking Up Credit Card Debt
Credit cards are deceptively easy to use, and they make living beyond your means feel like no big deal. You tell yourself you’ll pay it off next month, but before you know it, you’re carrying a balance and paying interest.
High-income earners often fall into the trap of thinking they’ll have no problem paying off a little extra spending, but interest builds fast. Suddenly, that “no interest for 12 months” deal turns into a mountain of debt you’re struggling to pay down.
3. Ignoring a Budget
It’s easy to think that a high salary means you don’t need to track every penny, but budgeting isn’t just for those on a tight income. Without a budget, even a solid paycheck can disappear quickly. You end up spending money without really knowing where it’s going.
When you don’t keep track of your expenses, small purchases add up. You’d be surprised how much a budget can reveal about your spending habits, even if you’re earning more than the average person.
4. Overspending on Housing
Many people fall into the trap of thinking they need to upgrade their home as their income increases. While living in a nicer neighborhood or getting a bigger space might feel like a reward, it’s one of the fastest ways to drain your income.
Experts suggest spending no more than 30% of your income on housing, but plenty of people stretch that limit, leaving less room for savings or unexpected expenses. A high salary won’t save you if most of it goes toward rent or a mortgage.
5. Buying New Cars Frequently
There’s something satisfying about driving a shiny new car off the lot, but it’s also a surefire way to lose money. Cars depreciate in value the minute you drive them home, and upgrading frequently keeps you in an endless cycle of payments.
While a high salary might make those payments feel manageable, constantly swapping cars means you’re losing money on depreciation and often paying higher insurance premiums. That’s money that could be going toward savings or investments instead.
6. Dining Out Constantly
It’s nice to treat yourself, but when dining out becomes a regular habit, your bank account starts to feel the burn. Eating at restaurants, ordering takeout, and grabbing coffee on the go can add up to hundreds of hard-earned dollars each month.
The occasional splurge is fine, but making it a daily routine is one of the easiest ways to see your paycheck disappear. Cooking at home might not be as glamorous, but it’s a simple way to save money without sacrificing quality.
7. Falling for Subscription Traps
These days, it seems like everything comes with a subscription—music, streaming services, meal kits, and even fitness apps. The problem? Those small monthly fees quickly add up, and before you know it, you’re spending a chunk of your salary on services you barely use.
Many people don’t even realize how much they’re spending on subscriptions until they look at their bank statements. Taking stock of those automatic payments can reveal where your money is trickling away without you even noticing.
8. Neglecting an Emergency Fund
No matter how much you make, unexpected expenses will happen. Things such as car repairs, medical bills, or sudden job loss. Without an emergency fund, you’ll end up relying on credit or loans to cover these costs, which just puts you in more debt.
Even high-income earners need a safety net. Experts suggest setting aside three to six months of living expenses in an emergency fund so that when life throws you a curveball, you’re prepared.
9. Not Investing Early
It’s easy to feel like you have plenty of time to start investing, but the earlier you begin, the better off you’ll be in the long run. Putting off investing means missing out on the power of compound interest, which can significantly grow your wealth over time.
Many high-income earners focus on their day-to-day spending without thinking about their long-term financial health. But ignoring investment opportunities now could leave you with regrets later in life.
10. Overcommitting to Friends and Family
Being generous with your friends and family can be rewarding, but constantly picking up the tab or lending money without boundaries can quickly drain your income. If you’re the one everyone turns to for financial help, you could end up with less than you planned.
It’s important to set limits on how much you’re willing to spend on others, even if you’re making a good salary. Generosity is great, but not at the expense of your own financial stability.
11. Chasing Expensive Hobbies
When you have more disposable income, it’s tempting to invest in hobbies that come with high costs. Whether it’s golf, skiing, or luxury travel, expensive hobbies can quickly eat away at your paycheck.
While it’s essential to enjoy life, indulging in costly activities too often can be a financial drain. Setting a budget for your hobbies ensures you’re not overspending on entertainment and still saving for the future.
12. Skipping Health Insurance
It might be tempting to skip out on health insurance if you’re young and healthy, but one unexpected medical emergency can wipe out your savings fast. Medical bills add up quickly, and without insurance, even routine care can become unaffordable.
High-income earners sometimes assume they’ll have the funds to cover medical costs, but a serious health issue can turn into a financial disaster if you’re not properly covered.
13. Taking on Too Much Debt
With a bigger salary, it’s easy to feel confident about taking out loans. But too many loans can create a cycle of debt that eats away at your income.
Even if the payments feel manageable now, accumulating debt means more interest payments over time, leaving less money for savings and investments. It’s easy to get caught up in financing everything, but eventually, the bills come due.
14. Keeping Up With the Joneses
Social pressure can be a sneaky thief. If your friends or coworkers are living a high-end lifestyle, you might feel the need to keep up.
The problem is that trying to match someone else’s spending habits can leave you broke, especially if they’re living beyond their means too. Staying true to your budgeting goals instead of keeping up appearances is key to staying financially secure.
15. Neglecting Insurance for Big Purchases
When you’re making a good salary, it’s easy to forget about the importance of insuring your valuable possessions. Skipping insurance or going with the bare minimum can lead to major financial setbacks if something goes wrong. Without proper coverage, a stolen car, a house fire, or a natural disaster could wipe out your savings in the blink of an eye.
While insurance can feel like an unnecessary monthly expense, it’s crucial for protecting your assets and preventing financial ruin when the unexpected happens. Investing in adequate coverage ensures you’re not left scrambling to replace what you’ve worked hard for.
16. Overlooking Professional Financial Advice
When you’re making a healthy salary, you might assume that you can handle your finances on your own. But high earners often make the mistake of not consulting with a financial advisor or tax expert, especially as their income grows. Without proper guidance, it’s easy to miss out on opportunities for saving and investing, or worse, make costly mistakes.
A financial advisor can help you create a plan to grow and protect your wealth, while also navigating the complexities of taxes and retirement planning. Not seeking advice from professionals can leave you mismanaging your finances, no matter how much you earn.
20 Things Poor People Waste Money on, According to Suze Orman
If you’ve ever watched her show, you know Suze Orman pulls no punches. She’s all about calling out bad money choices, urging people to take control of their financial destinies and ditch those pesky spending habits that derail progress. While her advice can be blunt, she aims to empower folks to build wealth and protect their financial futures.
It’s important to note, Suze Orman gets flak sometimes for being too harsh. She’s not shaming people, but highlighting how certain expenses can sabotage big goals like homeownership or a comfortable retirement.
20 Things Poor People Waste Money on, According to Suze Orman
12 Culturally Acceptable Habits That Leave Americans Drowning in Debt
The average American household carries over $103,000 in debt, including mortgages, credit cards, and car loans. While there are various factors that contribute to this staggering number, there are also certain culturally acceptable habits that have played a major role in leaving America drowning in debt.
12 Culturally Acceptable Habits That Leave Americans Drowning in Debt
12 Things Poor People Waste Money on Daily, According to Warren Buffett
This list is inspired by Buffett’s general philosophy, not direct quotes. The goal is to distill his wisdom into actionable steps for the average person. Think of it as “What would Warren Buffett do?” when deciding whether that daily treat or impulse purchase is truly worth it.
12 Things Poor People Waste Money on Daily, According to Warren Buffett
With an honors degree in financial engineering, Omega Ukama deeply understands finance. Before pursuing journalism, he honed his skills at a private equity firm, giving him invaluable real-world experience. This combination of financial literacy and journalistic flair allows him to translate complex financial matters into clear and concise insights for his readers.