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Call it a superstition, but I don't like to say "I'm broke" when cash is low. I grew up religious and was taught there is power in the tongue. So, over the years I've learned to simply say, "I can't afford that right now." Funnily enough, I've found that even when I've had only $50 left in my checking account, or $5,000, that phrase still seems to find its way into my vocabulary.

Of course, to some, this may be a case of money dysmorphia. I'm certain a person waiting desperately for the next paycheck to hit their account may look at someone who has six months' worth of their salary saved up and wish to be in the same position, despite whatever challenges may accompany it. But one of the most revered rappers of the 90s, The Notorious B.I.G., summed up this dichotomy simply: "Mo' money, mo' problems."

In the financial world, we call this lifestyle creep. It's a simplified way of describing how spending tends to increase as income rises. This can be the result of many things, higher inflation resulting in lower purchasing power, or simply a lack of financial planning. There are ways to address both, so let's start with the former.

In The Bahamas, we have experienced several consecutive years of elevated inflation (particularly between 2021 and 2023), meaning the value of a dollar in 2021 simply does not buy as much today as it did back then. The easiest way to offset these changes, which we have little control over, is to put your money to work. By placing it in an interest-bearing account, it can grow at the same rate as, or faster than, the inflation rate, helping you experience less financial strain over time. This is a tactic we regularly recommend to new investors who want to grow their savings but are not quite ready to take on bigger risks. It gets your feet wet, so to speak, and allows you to earn just enough to keep pace with rising prices.

Now, to tackle the latter: poor financial planning. Along with higher-paying jobs come invisible costs; and for many people, earning more money automatically translates to more spending.

You may find yourself upgrading your home or vehicle, finally taking that long-desired vacation with a higher price tag, or simply buying the things you've always wanted but could never quite afford — like those designer shoes. The problem is that this can lead to unexpected cash-flow stress if there is no deliberate budgeting plan in place.

The fix is pretty simple, but it requires honesty with yourself. Sit down and take a real look at where your money is going. Not a rough idea, an actual accounting. You might be surprised how quickly regular small purchases add up, for example, a streaming service you forgot to cancel, buying lunch three times a week, or treating yourself one too many times. None of it feels significant in the moment, but it compounds over time.

Then comes time for the hard truth, should you really pay more for rent simply because you can or do your current living circumstances give you more flexibility with liquid cash for the time being? Should you commit to higher car payments because you have a little more breathing room, or save a bit more for a higher down payment while driving your hand-me-down jalopy?

A good rule of thumb is the 50/30/20 approach: roughly half of your take-home pay goes to the things you need, thirty percent to the things you want, and twenty percent toward savings or paying down debt. It's not a rigid formula, and your numbers may look different depending on your situation. But the framework remains the same. Spend some, save some, invest some.

It also helps to distinguish between a price increase and an affordability problem. If your grocery bill has gone up because of inflation, that is a structural issue requiring you to either increase income, reduce spending in other areas, or find better returns on your savings. But if your grocery bill has gone up because you now shop at a more expensive store since getting a promotion, that is lifestyle creep — and it is entirely within your power to address it.

So the next time you catch yourself wondering where all your money went, resist the urge to say "I'm broke." Instead, ask a more useful question: Can I actually afford that — or have I just gotten used to spending like I can? The answer, more often than not, will point you toward your next financial decision.