- How to Deal With Lifestyle Inflation
How to Deal With Lifestyle Inflation
A surge in income often means that you start getting all these ideas for the money. Sometimes, the ideas involve saving, or putting the money into investments, or settling debts – all great things as far as your finances go. There are also going to be moments that you just forget about your financial road map and want to spoil yourself, after all, you’ve worked hard to get that income surge.
Spending guilt-free isn’t a bad thing – when you can actually afford it. Lifestyle inflation is the phenomena of spending bigger each time you make more money in life, and it can lead to an unending cycle of debt. This phenomenon is also a natural part of growing up, but can be the cause of living paycheck to paycheck.
Learning to deal with lifestyle inflation is also an important part of growing up, and here’s how you do it.
Set Aside Fun Funds
Enjoying the fruits of your hard work isn’t a bad thing, but like all good things, moderation is a key point. Splurging half your paycheck on something that you don’t immediately need is a surefire no-no. You’ve got a budget down by now, so expand it to include a fun fund – a few hundred pesos that’s all yours to spend guilt-free.
This way, you’re sure that you have money set aside to do whatever you want. If you don’t use it, you can just add it to the next paycheck’s fun fund and end up with a lot more money to spend on your wants.
Focus on the Important Things
A larger paycheck can sometimes mean having to take on more financial responsibility, especially if you live with or have a family of your own. A surge in income can mean you can start putting away for the future. Invest or save some of your extra money; let it grow into something you and your family can enjoy when you’re a little older.
If you’ve got debt, now is the time to double down on it and get it out of the way permanently. Your income surge will ensure that you still have enough funds to handle bills, your fun fund, and let you get rid of the debt that’s hanging over your head.
Debt and saving/investing have been lumped together because sometimes one may seem more important depending on the person. Some people can manage both, but the thing to remember is that eliminating debt comes first.
Make Gradual Changes
There’s nothing wrong with improving the way you live as you achieve more success and higher income in life. The issue is that making those improvements in one go, or with complete disregard for how it will affect your budget, in the long run, can spell a lifetime of debt.
It’s important to remember that as you increase your lifestyle, you also increase your expenditures. A car can spell expensive insurance. Likewise, you’ll have to keep up with payments on a new home. These are big changes that don’t need to be rushed.
At some point, you’ll have to accept that lifestyle inflation is a thing. Embrace it, because it means that you’re achieving great things in your career. Don’t be afraid to put most of the money away and save it for the future, because you’ll be able to enjoy it even more.
Compare the best deals in just one minute!
Never miss out on promos and finance tips!
Subscribe to the Moneymax newsletter
Dont worry, we take data privacy very seriously