We’ve all read stories about people who earn triple figure salaries yet still moan about the difficulty of paying bills or saving up for the future.

If you’re not lucky enough to be a high earner, you might wonder how this could possibly happen.

A large part of it is down to something called ‘lifestyle inflation’. As people earn more money they tend to buy more expensive things, rather than saving the extra cash for life’s emergencies or their retirement.

It’s a trap that results in people struggling to pay off debts and failing to reach their financial goals as soon as they hoped.

‘Many people base their lifestyle and the level of their spending around their income. They spend whatever they earn and, quite often, go into debt and end up spending more than they earn,’ says Patrick Connolly, certified financial planner at Chase de Vere.

‘It is understandable that those who have income in excess of their basic living costs want to spend money and enjoy their lifestyle today. However, in the words of John F Kennedy, “The time to repair the roof is when the sun is shining”.’

IS IT REALLY THAT WRONG TO ENJOY MY NEWFOUND WEALTH?

You might think it’s pretty boring to squirrel away every extra pound you earn when your wages increase, but it’s really important to try to balance your long-term saving goals with spending money today.

Although you may have excess income now, this may not always be the case. ‘You need to be prepared for when your income falls, perhaps if you lose your job or when you retire, or if your expenditure increases after buying a house, having children or getting divorced,’ explains Connolly.

By enjoying today as well as planning for tomorrow, you can have more confidence that your future will be financially secure.

Research suggests that to generate a modest annual retirement income of £10,000 above the state pension, you need to have saved around £250,000 – and possibly more to be on the safe side.

HOW DO I AVOID LIFESTYLE INFLATION?

Experts reckon everyone should build up a savings pot that will cover four to six months of essential outgoings. This should be kept in an accessible savings account so you can withdraw it in the case of a short-term emergency.

You should also be putting money away for your longer-term financial needs – whether that’s buying a home, paying your children’s university fees or preparing for retirement.

Setting up a direct debt into an ISA and joining your workplace pension scheme will ensure the money is diverted into investment vehicles before you have a chance to spend it.

Tom Selby, senior analyst at AJ Bell, suggests splitting your money into different pots: those for short-term spending and those for longer-term spending.

‘By doing this you can avoid seeing it disappear into the pockets of high street retailers or your local pub,’ he says.

‘Luckily there are loads of handy apps and online tools to help you budget effectively. It’s also worth spending a bit of time thinking about your goals today and for retirement, and seeing how much money you’ll need to enjoy both.’

Sophie Kilvert, a relationship manager at Seven Investment Management, suggests reviewing your budget at least once a year to work out how much you’re spending and what you can cut back on. For example, you might have subscriptions you don’t use anymore or be able to switch to cheaper insurance policies.

‘See where your money is going and where there are areas that you can make sensible cuts – like cutting out some of the takeaways,’ Kilvert says.

WHERE SHOULD I INVEST MY PAY RISE?

If you get a pay rise your first step should be to pay off any expensive debts. You should then look to build up emergency cash savings, and beyond this invest in longer-term vehicles such as stocks and shares ISAs, Lifetime ISAs and pensions.

There are huge incentives in place to encourage you to save for your future and it is well worth making the most of them.

Pensions offer a bonus through tax relief of at least 25% on the money you pay in, while a quarter of the money you take out after age 55 is tax-free.

Money in pensions grows free from tax, meaning you have the opportunity to combat the ravages of inflation and boost the value of your pot over time.

ISAs also offer tax-free growth and you can withdraw money tax-free if you need to pay for any unexpected outgoings.

For short-term financial goals, like buying a house in three years’ time, it is usually better to put money into a cash savings account. You don’t want to risk your money being depleted by a stock market tumble just before you withdraw it.

For longer-term goals, such as retirement planning, you can probably afford to take on more risk by investing in stocks and shares.

HOW MUCH SHOULD I INVEST?

It’s a good idea to aim to invest a certain percentage of your salary each month as opposed to a fixed amount. This is because as your earnings rise, so does the amount you pay into your savings pot.

‘You could go further and increase the percentage amount you save each time you get a pay rise,’ says Selby.

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