Monday, July 29, 2013

Ways to Avoid Lifestyle Inflation



Think back to the last time you made it to that next level of income with you personal finances. Was it a brand new job? A raise? What was your first thought? If it was, “I have so much more disposable income.” Then you are not alone. There are plenty of people who probably have that initial feeling. It’s exciting to make more money, especially when it is your first “real job.” Letting your spending equally grow with your income is called lifestyle inflation and can get out of hand pretty quickly.

Hedonistic Paradox
Have you ever heard of the paradox of hedonism? Well, it pretty accurately describes the dangers of lifestyle inflation. There will probably never be a time in your life when you feel like you’ve “arrived.” No matter how lavish your lifestyle becomes there is always something out there that is bigger, better, and more expensive than what you have. I like to call it the smartphone principle. If your goal is to have the best smartphone out there, you are going to be spending a lot of money every six months. It is better to learn to be content with what you have than it is to constantly seek new and better things.

Awareness
Lifestyle inflation isn’t always such a conscience thing. You may be out one day when you see something and think, “well, I can afford that now, so why not?” Eventually that can become a regular occurrence. So the first way you can combat falling into inflating your lifestyle is to become aware of its signs. Keep a watchful eye on yourself whenever you come into some new money. Make sure you aren’t spending right under your own nose.

Stay Behind
Think about this. If you are struggling to make ends meet and you finally get more money that’s great. However, if you let your lifestyle inflate, your new expenses will eventually swell to the point that you were at in your old income. It’s like you are kid who buys a whole new wardrobe of large shirts as soon as you fill out your mediums. The best thing to do is to let your income get a few paces ahead of your lifestyle. That way you can easily handle all of your expenses.

Save
Another thing that could serve you better than splurging with your new found income is using the money to bolster your savings. There are plenty of things you could apply your new income too you’re your 401k, an emergency fund, a child’s college fund, of general all-purpose savings accounts.

Destroy Debt
There is one thing that you should definitely take care of before you let your lifestyle inflate; debt. If you have pre-existing debts you are really hurting yourself if you start to spend more frivolously after an increase in income. Whether it’s student loans, credit card debts, or some other thing that has you in the whole, an increase in your salary is your chance to pay them off. 

Considering these tips, try to avoid letting your lifestyle grow to consume more of you money. Try to focus less on acquiring material things and more on time with friends and family.  

1 comment:

Khorshed Alam said...

Hello admin! Thanks for your visit!! Sorry for my lateness!! I like this article. I will bookmark this blog. Just because a home is vacant does that mean it cannot sell? Of course not! There is always someone willing to look at any kind of residence. Even if the residence is Vacant home because you didn't want it you will eventually discover someone who can take it off your arms and do with it what they please.