avoid lifestyle inflation golden handcuffs spend money

golden handcuffs money trap lifestyle inflation

An Introduction to Golden Handcuffs

You have probably heard the term “golden handcuffs” before, or if not the term itself, you know enough to recognize the concept once I explain it a little more.  For those of you who are unfamiliar with it, here is a brief overview: golden handcuffs is the term used when those making large (e.g., Biglaw or investment banking) salaries get sucked into the world of “keeping up with the Joneses,” always needing to buy more and more to keep up with an inflated lifestyle they have created for themselves.

They become trapped in this lifestyle by a pair of invisible “golden handcuffs” wrapped around their wrists.  In order to maintain this lifestyle of high-spending, they must continue to make the same, or greater, salary for the foreseeable future.

Golden handcuffs can get so bad and so tight that people see no way out – once the townhouse in Brooklyn or house in the suburbs is bought, along with tuition for private schools, new luxury cars every year or two, and fancy dinners out every weekend, people are often so deep into the lifestyle they’ve created that it becomes impossible to see any other way of living.  Those are the golden handcuffs.

Lifestyle Inflation – Golden Handcuffs’ Not-As-Evil Baby Brother

High spending like I just described is one end of the golden handcuffs road.  It happens once the handcuffs are firmly wrapped around your wrists.  But even if you do not end up engaging in this type of lavish spending, slow lifestyle inflation or a creep into overspending can happen to anyone.

When you go from being a poor law student to all of the sudden making multiple six-figures while some of your friends are still making $30,000 a year, it is easy to think the money will always flow so freely.  You might think this even if along with that multiple six-figure salary, you have multiple six-figures of student loans (those particular figures are easier to forget).

Even the most prudent among us can easily get sucked into spending way too much money, trapping ourselves in a job we are not even sure we will want to be at a year from now.

So, What Can You Do About It?

The most important step in preventing getting trapped by golden handcuffs is simply to be aware that they are out there, waiting to grab you, and to be conscious of your spending.

You do not need fancy shoes, suits or handbags to succeed in Biglaw or most corporate environments.  Seriously, nobody cares. I got more compliments on a faux leather Zara tote that I carried papers around in than I ever saw people complimenting someone else’s Louis Vuitton bag.

You do not need to get bottle service at a club every weekend just because you can, nor do you need to take your girlfriend out to the fanciest restaurants every weekend in New York City just because you can.

If you like luxury purchases then go for it, but never, ever feel like you need those to fit in. If you are on the fence about any purchase, put down the credit card and stick to something cheaper. You’ll thank me when you’ve paid off your student loans, no longer work in an office, and no longer have a need for those painful 4-inch heels anyways.

It is also smart to be cognizant of your online shopping. It is amazing what you can buy on Amazon Prime and a million other sites, and have delivered to you within a day if you want, but this type of spending can also spiral out of control really quickly.

It is one thing to occasionally make splurge purchases online, but if you find yourself online shopping at the office every day as a form of an escape, that is another issue altogether that needs to be addressed and it certainly won’t help your personal finances.

A Special Note for Those in Biglaw

For those in Biglaw, you will find that you can still live a life that is way more luxurious than you had been living as a student and way more luxurious than 99percent of the rest of working people your age if you take advantage of all the firm has to offer.

Firms and many companies often have state of the art gyms, so do you really need a fancy Equinox membership? The firm cafeteria might get old after a while if you eat there every day, but it is certainly good enough for a few lunches a week.

Same goes for firm cocktail hours – they can actually be fun, and are often held at rooftop bars and other fancy places around the city. For a few minutes of small talk with some partners you probably will not talk to again for six months, you get to spend the rest of the evening hanging out and talking to your associate friends at a rooftop bar overlooking the Hudson River.  That’s certainly well worth it and you are saving yourself cash at the same time!

The Bottom Line

Ultimately, anyone can get trapped by golden handcuffs, and to some extent they do get their grasp around most.  The key, therefore, is to be aware that they exist and to make sure yours do not get too tight.

You do this by being cognizant of your daily spending, splurging and spending freely only on luxury items that you truly want (since you are working your butt off and making lots of money, you likely will have some disposable income), and really analyzing your entire life and work situation before making any big money purchases. Do not make any big purchases (like a car or a mortgage) until you know for sure that you are in it for the long haul.

There is nothing worse than owning a giant house in the suburbs and resenting your life and wishing you had the freedom to move to another state or take another job, but you cannot because you and your family have changed your lifestyle to match what you think is expected of a Biglaw associate or partner.

It is much easier to spend less and then decide later on, once you have established yourself in a career that you truly enjoy, that it is time for a big purchase.  If you’re already practicing restraint in your spending and are intrigued by a lifestyle that offers you more options, check out my post on FREEdom.  Practicing financial responsibility can lead to an early exit from a job you dislike (like what I did – read more about my story here: About Me!).

Your Turn – Have You Ever Been Trapped by Golden Handcuffs?

Have you ever fallen into the trap of golden handcuffs? Were you aware of it when it was happening or did lifestyle inflation slowly creep into your life as you became accustomed to a large salary?

Have you taken any steps to scale back? Let us know in the comments below if you have any tips to prevent, reverse or otherwise get rid of those pesky golden handcuffs!

golden handcuffs tips to avoid lifestyle inflationgolden handcuffs live beyond means tips to avoid

Join Now!

FREE Download

How to Create Your Dream Resume

Need some help dreaming up the career and life you know you’re meant to have?  You’ve come to the right place!  Join our mailing list to get the latest news and receive our “Dream Resume Builder” worksheet delivered straight to your email.

You have Successfully Subscribed!