Everyone knows saving money is important but still everyone doesn’t save for future. We all worry about the future – all the time. Then, why don’t we save? We seem to have the knowledge and the tools to do so, let alone the good intentions, yet over and again fall short – right into the hands of the lifestyle inflation’ trap.
There is a near universal belief that having more money automatically improves a person’s personal finances. This could be the case if an increase in income or a sudden windfall are handled properly, but it doesn’t always work that way. More often than not, an increase in income is followed by an increase in spending. This is commonly referred to as lifestyle inflation and while an increase in spending is not always a bad thing, there is the potential to take it too far.
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Tips to avoid lifestyle inflation and save money:
Don’t Give into Peer Pressure
The origin of lifestyle inflation comes from wanting to keep up with the Joneses. We don’t feel adequate when we compare ourselves to what others have. But one of the easiest ways to avoid lifestyle inflation is to stop caring about what other people are doing with their money.
If you find yourself getting jealous of what others have, that’s only going to make you feel worse. Letting insecurity takeover is a bad idea. (And many are guilty of going into debt for that very reason.)
Instead, look out for yourself. After all, no one cares about your money as much as you do. Is it really worth the price you’re going to pay to try and impress people?
Make #savings a priority.
Saving a percentage of your income is the first step toward financial security. When your income increases, your savings should increase as well. This will not only provide adequate backup in the event of a financial emergency but also prevent excess spending.
Plan in advance.
If you received a raise today, what would you do with the extra money? Would you splurge on a big ticket item? Maybe you would move to a bigger apartment or buy a new car. Would you put your money in savings or invest in your future? While some people may call this daydreaming or fantasizing, it is actually good practice in establishing a plan for increased earnings. When you have a plan, you are more likely to put your money to good use.
Keep a lot of options on the table.
One thing You may have noticed that once you start inflating your lifestyle, you stop really looking at certain options. Usually, free and inexpensive things are immediately off the table because, after all, you’re above that, right?
When we’re looking for something to do, we don’t start with movie listings or expensive events. We look at things like our local community calendar or the parks and recreation schedule. We look around our house at the multitude of things to do at home, from board games and art projects to books and home improvement tasks. There are more cheap and free things to do than we ever have time to get done, so why spend a lot of money on expensive things
Are You Ready to Avoid Lifestyle Inflation?
Overall, sticking to your guns will make it easier to avoid lifestyle inflation. We don’t need nearly as much as we’re led to believe.
Always question your purchases. Make decisions for yourself, and don’t let the actions of others influence you. Remain grateful for what you have in life. Avoiding lifestyle inflation will be a cinch.
