The Lifestyle Tax

Why Rich People Don't Feel Rich

Feb 26, 2026

When I left Wall Street to build Teles Properties, my wife Neeti was the only one working. We had just had our first child, and I made almost nothing for the first couple of years.

So we made one decision: live on her income only, forever. Whatever I made later would go toward saving and investing, and we would keep our spending exactly where it was.

We grew Teles 10x in five years and sold it. The work paid off, but we kept the same budget after the sale. For 14 years now, we spend what we spent back then, even though our net-worth is exponentially higher.

Here are some lessons that I learned:

1. This is not about saving on lattes.

No one ever got rich by skipping their morning coffee or putting an extra $3,000 in their 401k. I’m a capitalist, and I want you to make more money.

But you don’t keep every dollar you make.

If you made more this year and bought a new car to celebrate, you’re happy with the car, but you kinda gave back what you earned.

There are two levers: what you make and what you keep. Most people only pull the first one.

2. Making more money usually just moves the goal post.

When people start making more money, they start spending more money.

They believe that if they earn more, they have earned the right to spend more. And that is totally true. But you end up right back where you started, just with bigger numbers. No bueno.

3. Your income can disappear, but your spending habits won’t.

Most people bet that they will just keep making more and more and it will all work out.

But your income is probably not guaranteed.

If you lose your job or your business has a bad year, you still have the same mortgage, the same car payments, the same tuition bills.

The easier path is to keep your spending the same, even when you start making more.

4. The real benefit is not the money.

Once you keep your lifestyle fixed, you make better decisions because you are not stressed about keeping up. You can take risks, say no to bad deals, and wait for the right opportunity, because you don’t need the money right now.

5. It’s not what you make. It’s what you keep.

If your income grows and your lifestyle grows with it, you are doing a little better each year, but the gap between what you make and what you spend stays the same. That is optimizing.

If your lifestyle is fixed, your income grows while your spending stays flat. The (good) gap gets wider every year. That is maximizing.