By Julia Carpenter
Oct. 16, 2025
When I was in college, I never overdrew my bank account.
I worked a smattering of odd jobs—managing the front desk at the anthropology department and writing stories for the student newspaper—but the money I made wasn’t much. Yet it never felt burdensome to manage it.
If anything, those years instilled in me a glowy kind of financial confidence. “I can do this,” I thought as I balanced my checkbook and deducted $300 for rent (yes, I know, those were the days).
But when I started making more money than I ever had before, something peculiar happened. At the same time that I scored a hard-earned raise and published my first book (ironically enough, one about personal finance), I got hit with those dreaded overdraft fees.
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Now, two years into my freelance career, my income is less than half of what I made while working full time. But just like in those college years, I could tell you where every single dollar I make goes and how much is allocated for what bill.
That thrifty spirit I cultivated when I was in my 20s is back—but why couldn’t I hold on to it when my income was at its peak?
More money, less focus
I’m not the only one who feels that they were “better at money” when they had less of it.
Keina Newell, a financial coach based in Washington, D.C., says that she has heard the complaint way too often from her clients. From her perspective, people who honed good money habits when times were lean are all too willing to abandon those same practices once they earn more income.
“People are taught to budget when they’re trying to make ends meet,” Newell says. “So when you’re in that space of making ends meet, you’re sticking within the parameters that your paycheck affords you. But then, as people make more money, it’s like they give themselves this ability to ‘graduate’ from budgeting.”
In many cases, there’s an easy culprit to blame: lifestyle creep. As people make more money, the options available to them suddenly expand, says Antoinette Schoar, a professor of finance at MIT Sloan School of Management.
When I was a broke college student, my friends and I frequented the same dirty-but-cheap dive bar. Years later, when my salary broke six figures, I found myself dropping $20 on a fancy cocktail without batting a designer-mascaraed eyelash. And after you’ve developed a taste for $20 martinis and expensive makeup, Schoar says, it’s much harder to go back to the dive-bar happy-hour special—unless, of course, circumstances call for you to do so.
More money often means more to juggle, Schoar says: more work obligations, more life responsibilities, and more money to manage, invest and allocate.
Necessary trade-offs
Research from the University of Chicago shows that people living in poverty are able to see financial decisions more clearly than wealthy people facing the same choices. They will make trade-offs if it means staying within their budgetary expectations, and they’ll bear greater time and energy burdens to make that happen.
One of the researchers, Eldar Shafir, now a professor of behavioral science and public policy at Princeton University, points out that those living in poverty may be able to make more rational financial decisions, but the act of the decision-making is still stressful and taxing. They carry a much greater mental burden, he says, whereas the rich can afford to pay more if it means protecting their time and energy.
But he agrees that as people move along in their careers and see their incomes rise, they can also find it challenging to keep sight of the same goals and habits that guided them previously.
Shafir likes to use the image of a suitcase to help people conceptualize their budget. What you want is a suitcase that can contract or expand with ease, he says, so that it can journey with you to a variety of places and serve you well on different journeys. Some people select a suitcase that’s too small and get frustrated when they can’t squish everything inside; others opt for a giant piece of luggage and soon find they’re filling it with all sorts of junk they don’t need.
“People who are constrained manage things more carefully,” he says. “Having more allows you to have the habits to be careless.”
No ‘mental math’
Making more doesn’t always mean you manage that money poorly, of course—so long as you can manage the transition and remain clear-eyed and goal-oriented. (That is, as long as you make sure your suitcase is appropriate for the financial journey you’re on.) And for many people, myself included, those things blur together somewhere along the way.
I think back to managing my cash flow during my first year of freelance writing. I might have had less money—I was earning about a third of what I had at my full-time corporate job—but I was better at tracking money coming in and out, scheduling tax payments and shoring up my emergency fund.
Newell says when she talks to clients complaining of this phenomenon—struggling to get back to the seemingly sound money mind they had when they were living on less—she first recommends they do a mini audit of their monthly cash flow. When we make more money, she says, we often feel overwhelmed by the change in numbers.
“I think a lot of people do mental math and I call that fake math,” she says. “There are a lot of guestimations.”
Instead, she tells clients: “Let’s put the numbers down… How does their money move in a 90-day period? Where is the disconnect between how you believe you should experience money versus how you are experiencing money?”
Personally, I already feel like I have a pretty good grip on my cash flow. And as the professionals had predicted, that grip definitely feels easier to hold now that I am working with smaller numbers and a more restrictive budget. So after my girlfriend and I bought and moved into our new apartment, I suggested we make a tweak to our financial plan. We’re paying a couple hundred dollars less toward our mortgage than we were in rent. But rather than freeing up more room in our monthly budget, I proposed taking the difference and socking it away in savings. In a way, we are forcing ourselves to live within that more restrictive budget.
As our lifestyle expands, we often start to think of budgeting as a punishment; Newell encourages clients to instead see it as a tool. Once you have a concrete idea of the numbers flowing in and out of your accounts monthly, you can apply that tool to open more options, not take some away.
Confronting the numbers, Newell says, also allows you to get back to the place you remembered from your past, when saving, budgeting and more didn’t feel so overwhelming.
A time when a dive-bar happy-hour special felt like something to celebrate.
Julia Carpenter is a writer in New York. She can be reached at reports@wsj.com.
This Wall Street Journal article was legally licensed by AdvisorStream.
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