Lifestyle inflation is a topic that has already been covered quite a few times on the web, more than two million times in fact! Nonetheless I still want to cover this topic today because I’ve fallen victim to it many times over and this time I would like to stop it in its tracks before I do it all over again, maybe you can benefit from this too.
Lifestyle inflation means that as your income rises so do your expenses, when you get a better job it often means a nicer house, a nicer car, more brand name clothing ‘because you can afford it now’ a little splurge here and a little splurge there. I’ve done this myself;
When I first moved out of my parents home I was about 20 years old with very little debt, before I moved I saved up a lot of things I would need for when I moved out on my own such as dishes, a little bit of furniture, linens etc. I moved far away from my parents with my boyfriend at the time and quickly got promoted at my job. I wanted to make us a home together and since it’s hard to make a rental look cozy we spent quite a bit of money that we didn’t have to buy ‘necessities’ such as a couch, a table and chairs , decorations and other furniture. That left us both in a lot of debt that we had to pay back and we were still living paycheque to paycheque like we were before we got good jobs. At times we were so broke that we paid our rent with our credit-card. This is a classic example of lifestyle inflation, we allowed ourselves to spend a little bit because we thought we deserved it and it was just too much too soon.
That is all behind me now, but I am now once again at the point that my finances are starting to look better and I am getting bigger paycheques. It is SO easy now for me to say, “I deserve to go out and spend $60 on a dinner because I can afford it now and I couldn’t before!” This is not to say you can’t treat yourself every once in a while, but can you do it without spending a boatload of money? It takes a bit of thought and I guess the trick is moderation.
I’ve made my first lump-sump mortgage payment this month, only a hundred dollars, but that signifies I am entering a new stage in my debt repayment and financial overhaul. I am inching closer and closer to not living paycheque to paycheque any more and I am also finding it harder and harder to not let my expenses go up as my income does. I will never get out of debt if I allow that to happen, I must keep my expenses proportionally lower as my income rises so I can slowly climb out of this financial hole.
Do you have any tips for me, or perhaps you’ve been through the same? I’d love to hear from you below!