Denis Diderot was a French writer and philosopher who lived in poverty almost his entire life.

Diderot was mostly known for founding the Encyclopedie, a French encyclopedia and one of the most comprehensive and respected of its kind.

In 1765, Diderot’s daughter was set to be married.

Unfortunately, Diderot was not a wealthy man, and was unable to afford a proper wedding for his daughter.

Luckily, an Empress Catherine from Russia was a book lover and a big fan of Diderot’s work. She decided to buy Diderot’s full encyclopedia library for a small fortune.

Suddenly Diderot was rich! After paying for the wedding, he decided to splurge on a scarlet robe to celebrate his new wealth.

This led to a new dilemma.

Diderot found that his scarlet robe could not be worn with any of his other clothes. He had poor man’s shoes, shirts, and hats that looked out of place with his new luxury robe.

In his words – “there is no coordination or beauty” between his robe and other belongings.

Therefore, he decided to upgrade everything he owned. He purchased new furniture from Syria. He decorated his home with expensive pottery, and leather furniture.

I will leave it to your imagination how long his wealth lasted after that.

As you can see, even in the 1700s, they were aware of lifestyle inflation. However, the Diderot story led to this being known by another term – The Diderot Effect.

The Diderot Effect is even more observable today than it was all those centuries ago.

You buy a new suit, well, now you need new shoes and a new tie, new cufflinks and a new pocket square.

You buy a new television, well now you need a new TV cabinet, and a now you need to rearrange the living room and get a new couch and coffee table, and of course you need to subscribe to HBO Max to enjoy some new 3D movies on your new TV, otherwise what was the point of buying it?

This is why in personal finance circles we stress the importance of avoiding lifestyle creep, and not increasing your spending when your income increases.

Thankfully, the Diderot Effect can also be manipulated to your advantage.

Instead of letting ill discipline destroy your wealth, why not reward yourself for good discipline and supercharge your wealth instead?

Every time you buy something new, you need to put an equal amount into your Sharesies account.

That means every $200 dress you buy also will equal $200 of stocks that will contribute to your future.

If you’re a real boss, you could even say every time you want to buy something new, you refrain, and instead invest that money!

“I’d love to buy a new TV, but my old TV works just fine. Let me take this $2,000 and buy some JB Hi Fi stock instead.”

Your habits become your fortunes.

If you’re able to avoid the Diderot Effect, or better yet, use it to your advantage, you’ll be amazed at the amount of wealth you can build in a short time, and how much fun you can have as you see your portfolio go up and up and up.

Most of all, your future self will thank you!!