How To Avoid Lifestyle Inflation

How To Avoid Lifestyle InflationI believe that most people fall to lifestyle inflation eventually.

You most likely will not live the same lifestyle as you did when you were 18 and fresh out of high school or 22 and fresh out of college, but you also don’t want lifestyle inflation to get so out of control in your life where you have so much debt that you don’t know what to do next in life.

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Some lifestyle inflation is to be expected, but what do you do when you know that your income will keep increasing but you want to avoid drastic lifestyle inflation?

Think about why you want to start spending more money.

Like I said above, some lifestyle inflation is to be expected. You might one day want a nicer or bigger house because you can afford it and/or you have a bigger family. You might want to stop eating Ramen noodles 24/7 because it is not healthy for you and because you can afford to eat healthier items.

However, how do you know if you should buy that other expensive item? You should think about whether you truly want it, and why you want it.

If you only want to spend money so that you can keep up with the Joneses, then spending money may not be in your best interest… You should stop and think about why you want that item, and if you actually need it.

With your next raise, transfer that amount automatically to your savings.

If you are about to receive a raise of $100 each month, then you should try to automatically save this. By automatically saving that amount, then you probably won’t fall for lifestyle inflation because you never actually get to see that extra $100 each month.

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Have financial goals.

Having financial goals can keep you motivated so that you know why you shouldn’t succumb to drastic lifestyle inflation. It can keep you on track so that you know what you can afford and what you cannot afford.

For example – If you know that you need to save $500 each month so that you can buy a house in the future, then this may make you think twice before you buy an expensive gadget that you may not need.

Have you ever experienced lifestyle inflation? What happened?

 

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    Disha

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