How to Avoid Lifestyle Inflation for Fresh Graduates
Published: June 2, 2015 | Updated: December 12, 2019 | Posted by: Carlo Miguel Castañeda | Personal Finance
There’s something extremely satisfying about finally getting your very first paycheck from your very first job. There’s this distinct feeling of euphoria and elation that grips you and makes you want to spoil yourself.
It’s easier for a fresh-out-of-the-university person to fall into the trap of lifestyle inflation. It’s also easier for the same age bracket to manage their money, especially with all of the tech and the apps to help track expenses or plan a budget according to a specific goal.
Experts like Jean Folger have attributed the phenomenon of lifestyle inflation with a need to keep up with the latest trends. They also state that while it is an eventuality as your pay grade goes up, it doesn’t mean you can’t avoid the worst of it. With that in mind, here are some tips to avoid lifestyle inflation for fresh graduates.
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Keep your lifestyle simple
That first paycheck can symbolize a lot of things for you, one of which is you are now an adult that has responsibilities and much else besides. Your first job and first paychecks won’t always be as huge as you might expect, so keep any “treat yourself” spending simple.
It really IS okay to separate a portion of your paycheck specifically for spoiling yourself. What isn’t okay is going over the top. You do deserve something for putting the effort in and getting the job done as quickly and as efficiently as possible, but rewarding yourself with a super expensive item is too much.
Save up for an emergency fund
You’ve heard this time and time again from your parents, sometimes you’ve probably resorted to rolling your eyes and telling them that you know, that you’re not a child anymore. What your parents mean at this point is to save for the bigger purchases in your life, or if you’re in a long-term relationship with the possibility of marriage, save up for that.
The more you save, the less tempted you are to spend all your money in one place at any given time. Think of it as delaying gratification, which is great for your emotional quotient. Saving also builds the habit of creating a budget so you know where all your money goes.
Avoid Ads that Can Trigger Impulse Buys
Given how people spend a large amount of time on their smartphones, or in front of laptops and the internet, it’s not strange to think that a lot of your impulse buys are because of advertisements that happened to pop up while you were browsing.
People often react to visual stimuli, and with that comes a higher chance of you making an impulse buy. You can’t completely avoid ads, but ad blockers in your browsers might help mitigate any temptation you encounter while surfing.
Don’t Get a Credit Card If You Can’t Pay Dues on Time
For one, it doesn’t make sense yet when you’re 21-ish and just starting your professional career. A credit card is handy, yes, but is also a gateway to spending more than you can afford right now. You may reason that you also shop online, but between the interest and the possibility of falling in debt, you won’t want that this early on.
Consider getting a debit card, or an app that mimics a debit card, that way, you can only spend what’s already in the card itself.
Don’t Compare Your Lifestyle to Other People
The people in your social circles come in different shapes and sizes. They also come from varying backgrounds, and it’s unfair to all of you if you start comparing what you don’t have against what they do have.
Comparison is one of the biggest causes for a sudden inflation in one’s lifestyle. It’s the need to be ‘in’, the want to be part of the cool people with the latest and greatest. Giving into these things eventually brings about buyers’ remorse – when you realize that maybe suddenly dropping tens of thousands on an item that you don’t really need right now wasn’t such a good idea.
An uptick in spending eventually happens when you get a raise, or find yourself working a higher paying job. You’ll eventually have the spending power to buy better shoes, or clothing to match your profession. But you’ve just graduated and started your very first job, for now, it’ll be to your advantage to dream big, and find ways to make those big dreams happen.