Keeping Lifestyle Inflation at Bay

Lifestyle inflation is when we spend more money when our income increases. This can feel natural because the more we earn the more we can afford to spend. But this can make it very difficult to save for retirement or meet other financial goals. Lifestyle inflation is what causes many folks to get stuck in the rat race instead of being able to retire sooner. Here are some ideas to help curb lifestyle inflation when we get that big raise next time. 🙂

  1. Visualize the net amount of a raise after paying payroll and income tax.
  2. We don’t necessarily deserve nice things. But we deserve to be happy – which can be jeopardized if we overspend on nice things by sacrificing financial security.
  3. Hang out with friends who have similar spending habits to ourselves.
  4. Pay ourselves first. Set up an automatic transfer for a fixed amount of money from our bank account to an investment account every month.
  5. Define our goals and only spend new money if it will get us closer to those goals.
  6. Have inexpensive hobbies such as reading, blogging, hiking, playing music, and cooking.
  7. Realize that success doesn’t equate to material possessions. Better indicators of success are health, love, friends, family, and experiences. We should be happy with our quality of life without feeling the need to prove it to others.

Reaching a good balance of spending and saving is a personal journey for everyone. There are some people who save too much without enjoying life as it comes. There are others who impetuously spend too much without thinking of their future. Finding the sweet spot between the two extremes will bring us financial happiness. 🙂 Happiness is like peeing our pants. People around us can see it, but only we can truly feel the warmth of it. 😀 Live for today but don’t forget to plan for tomorrow.

 

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Random Useless Fact:

QiZai is the only giant brown panda in the world left. He is literally one of a kind.

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A Frugal Family's Journey
06/15/2018 9:23 am

Love this post! These are principles our family have always lived on. Thanks for sharing and refreshing them in our minds. 🙂 AFFJ

Ahmet Okyay
Ahmet Okyay
06/16/2018 7:45 pm

What I prefer is to be extremely frugal about most things that I don’t really care about (e.g. ride generic car), but spend lavishly on a few select items which yield the most subjective pleasure (Mill’s Utility) compared to the money.

P C
06/18/2018 12:02 pm

Being frugal is a skill that not many have mastered. I just live vicariously through other’s wonderful food/activity/travel posts on social media. Of course, I’ll spend the money when I really want something… what’s the point of having a big account balance when you can’t enjoy the fruits of your savings!

JackHandy
JackHandy
06/18/2018 5:57 pm

I’ll take exception to the “deserve to happy” line. We deserve nothing and the default state of life is certainly not happiness. Survival is of primary importance, and if happiness can be had along the way, then that’s certainly a lucky equilibrium.

HandyJack
HandyJack
07/06/2018 3:17 pm

Taken to its logical conclusion, ‘deserve’ simply means being entitled to the resources of others…an inherently evil and destructive philosophy.