Want To Avoid Lifestyle Inflation? (Then Read This Now) | Wildchildretire

Just get a new raise and want to know how to avoid the dreaded lifestyle inflation?

Well, you’re in luck.

Here we’ll show you 11 simple tips to help fortify your money-saving habits so you won’t fall victim to “Keeping up with the Joneses.”

Through multiple raises, these tricks below are what my wife and I have used to help us stay the course toward our financial independence goal of 40 years of age.

So if you want to know how finding like-minded folks or even just partaking in the simple practice of gratitude can help you stay the course to financial success, check out the easy read below.

Let’s dive right in.

What Is Meant By Lifestyle Creep?

Lifestyle creep is the gradual increase in spending that often accompanies earnings growth. In other words, as your income rises, so does your spending – sometimes without even realizing it. This can be tricky to manage because it’s often subtle at first.

For example, let’s say you get a raise at work. You may not immediately buy a new car or a bigger house. But you might start buying more expensive groceries, eating out at nicer restaurants, or taking more vacations. Over time, these small changes can add up to a significant increase in your overall spending.

Lifestyle creep can be dangerous because it can erode your savings and make it difficult to reach your financial and investors goals.

You’re trying to save for a down payment on a house. However, if your lifestyle creep means spending more each month, it will take longer to save enough money for your down payment.`

Or, if you plan on retiring single and trying to save, lifestyle creep can eat into your checking account and savings and make it difficult to reach your goal.

The good news is that you can do some simple things to avoid lifestyle creep.

How To Avoid Lifestyle Inflation (11 Tips That Actually Work)

1. Define Long Term Goals

It’s essential to have long-term goals to avoid lifestyle inflation. As stated earlier, lifestyle inflation is when you start spending more money as your income increases. So, for example, if you get a raise at work, you might begin to buy nicer clothes or go out to eat more often.

Long-term goals can help you avoid lifestyle creep because they give you something to save for in the future. For example, if you have a goal of buying a house, you’ll be less likely to spend your money on unnecessary things. You can also use long-term goals to help you stay on track with your finances. For example, if you have a goal of financial independence, you’ll be more likely to save money and invest it wisely.

2. Organize Your Finances (AKA Budget)

Ahh, yes…the beautiful budget…let me count the ways I love you…

In all seriousness, though, knowing how to create a family budget, using one, and sticking to it, is one of the most effective ways to avoid inflation in your lifestyle. It’s when your spending begins to increase along with your income. It’s easy to do, especially if you receive a raise or bonus. Then, suddenly, that extra money starts burning a hole in your pocket, and before you know it, you’re spending way more than you used to.

Creating a budget helps you organize personal finances and forces you to take a hard look at your spending habits and identify what is truly necessary and what can be cut back on. It also allows you to track your progress over time and see how closer you are to your financial goals.

There are a lot of different budgets, so find one that works for you and stick with it! And if you need a little help getting started, check out Personal Capital. It’s a free money management app that allows you to budget from the convenience of your palm on your cell phone. Plus, you can speak to financial experts for free if you need to.

So what are you waiting for? Take advantage of technology, get started on your budget today, and avoid an inflating lifestyle in the future!

3. Lock-In Your Raises

When you get a raise, it’s tempting to want to spend more. But if you’re not careful, you can easily fall into the trap of lifestyle creep.

Fortunately, there’s a way to avoid this. It’s called “locking in your raises.” This means that, instead of spending your extra income, you save it or invest it. This way, you can maintain your current lifestyle while still building your wealth over time.

Here are some examples of how locking in your raises can help you avoid “the creep”:

1. Save your raise: Instead of spending your extra cash, put it into savings. This way, you’ll have a cushion to fall back on if you encounter financial difficulties.
2. Invest your raise: Use your extra cash to invest in stocks, real estate, or mutual funds. This can help you build wealth for the future, eventually replacing your income from work.
3. Pay off debt: If you have high-interest debt, such as credit card debt, paying it off with your raise can be smart. You can save a lot of money o interest payments, plus you get out of consumer debt a lot quicker.

Locking in your raises is a great way to avoid self-inflicted inflation. By saving or investing your extra income, you can maintain your current lifestyle and live within your means while building your wealth over time. So next time you get a raise, think about how you can lock it in and avoid the trap of lifestyle creep.

4. Automated Your Savings Account

If you are like most people, you have probably experienced a little bit of self-induced inflation at some point in your life. It’s easy to do. As your income goes up, you begin to spend more money and upgrade your lifestyle accordingly. Within a blink of an eye, your expenses have increased along with your income, and you are no longer saving as much money as you used to.

One of the best ways to avoid that is to automate your savings. By setting up a savings bank account that automatically deducts a fixed amount from your paycheck each month, you can make sure that you are always saving money even as your income increases. This will help you keep your spending in check and avoid “The Trap.”

5. Automate Your Investments

And as for the investments aspect…

Automating your investments is an excellent way to stay disciplined with your spending to avoid lifestyle creep. You can use the Robinhood app on your cell phone to help you effortlessly automate your investments. This will help you stay focused on your long-term goals and not get caught up in the short-term fluctuations of the stock market.

6. Say No To The Credit Card

GET RID OF THE CREDIT CARDS!!!

That is the number one way to avoid lifestyle creep.

For example, using just cash:

• You are less likely to make impulse purchases when you use cash only
• It is easier to stick to a budget when you use cash only
• Cash allows you to see how much money you have, which helps prevent overspending
• You may be less likely to incur debt when you use cash only

So, if you want to avoid lifestyle creep, get rid of the credit cards and start using cash only!

7. Purchase Needs vs. Wants

When you were younger, your parents may have given you an allowance. You probably remember getting excited about spending that cash on the latest toy or video game. But, of course, as we get older, our priorities change, and so does what we spend our income on. But just because our spending habits change doesn’t mean we’ve outgrown the need to be mindful of our spending.

In fact, it’s even more important to be mindful of our spending as we get older because we’re more likely to experience the sneaky lifestyle inflation.

For example, you start out making $30,000 a year. You might live in a small apartment and eat out only occasionally. But as you get promoted and start making $60,000 a year, you might move to a nicer apartment and start going out to eat more often.

Lifestyle creep is entirely normal. But it can be dangerous if we’re not careful. That’s because it can lead us to spend more than we actually have.

One way to avoid it is to be mindful of the difference between needs and wants. We absolutely need to live. We need needs like food, shelter, and clothing. Wants are things that would be nice to have but we can live without, like a new car or a fancy dinner out.

When we’re mindful of the difference between needs and wants, we’re less likely to let our lifestyle creep up on us. We’re also more likely to have cash left over at the end of the month for things important to us, like savings or investments.

Just remember…

Focus on the needs not wants.

8. Don’t Create More Debt (Homes, Cars, etc.)

If you get a raise or come into extra income, don’t make the mistake of immediately upgrading your lifestyle by buying a new home or car. This is a recipe for disaster because you’ll end up saddling yourself with more debt and payments, which will eventually eat your raises and extra income.

Instead, try to keep your lifestyle the same and use that extra income to pay down debt or save for retirement. This may not be as exciting in the short term, but it will help you avoid it and keep more of your hard-earned money in the long run.

9. Treat Yourself (But Withing Your Means)

You’ve just gotten a raise at work, or maybe you finally landed that big promotion. Congrats! What better way to celebrate than by treating yourself to a little something special? But before you go out and spend your hard-earned cash on something extravagant, it’s important to be mindful of lifestyle creep.

It’s easy to fall into thinking that just because you’re making more money, you can also afford to spend more. But if you’re not careful, lifestyle creep can lead to serious debt problems down the road.

One way to avoid lifestyle creep is to treat yourself within your means. That doesn’t mean you can never enjoy the fruits of your labor – but it does mean being mindful of how much you’re spending. For example, you could treat yourself to a nice dinner out instead of buying a new designer handbag. Or, instead of taking a luxurious vacation, you could go to the movies.

By spending wisely, you can avoid the trap of lifestyle creep and keep your finances healthy for years to come.

10. Find Like-Minded Frugal Friends

Having folks like yourself is a great way to keep track of your goals and help you avoid “Keeping up with the Joneses.” Being around frugal friends can be a great support system to help you stay on track with your financial goals. Here are some examples of how having frugal friends can help keep you accountable and save more:

• Your frugal friends won’t let you spend recklessly. They’ll be quick to call you when you’re making a purchase that’s not in line with your goals.
• You can learn from each other and share frugal living tips. Spending time with people who are good at managing their money can help you develop good habits and learn new tricks for saving.
• You can hold each other accountable. Having someone to check in with on your spending and saving goals can help you stay on track.
• You can save together. Collaborating with friends on splitting the cost of bulk purchases or carpooling can help you save money.

If you’re looking to save more and stay on track with your financial goals, finding frugal friends is a great way to do it. Meetup is a great place to start. There are groups for frugal living worldwide, and you’re sure to find one in your area. Joining a group is a great way to meet like-minded people and learn new tips and tricks for saving money.

So, what are you waiting for? Get out there and start meeting some frugal friends!

11. Become A Gratitude Master

Become one with the Earth… and your wallet.

We’ve all been there before. You get a raise at work, or you come into some extra cash, and suddenly your lifestyle starts to change. You start buying new clothes, going out to eat more often, and upgrading your home.

But what if there was a way to prevent it? Or at least a way to make it less likely to happen?

Enter gratitude.

Research has shown that practicing gratitude can have many benefits, including reducing stress, improving sleep, and making you more resilient in the face of adversity. But one of the lesser-known benefits of gratitude is that it can help you avoid lifestyle inflation.

How?

By helping you appreciate the things you already have.

When you’re constantly focused on acquiring new things, it’s easy to take the things you already have for granted. But when you take the time to appreciate the hot water, you have to take a shower, or the working car that gets you to your job, you start to see just how much you already have. And when you realize how much you already have, it becomes easier to resist the urge to spend money on things you don’t really need.

So if you’re looking for a way to avoid lifestyle inflation and how to enjoy life without money, start by downloading the Presently gratitude app and start practicing gratitude. It might be the key to a happier, healthier, and more sustainable life.

FAQ

What does “keeping up with the Joneses” mean?

“Keeping up with the Joneses” is an expression that refers to the idea of trying to match or exceed the level of success, wealth, or possessions of one’s friends or neighbors.

What is lifestyle inflation?

Lifestyle inflation is the tendency to spend more as their incomes rise. Lifestyle inflation can lead to debt and financial problems if not kept in check.

Why does lifestyle inflation happen?

Lifestyle inflation happens because people’s spending habits often change as their incomes increase. As people earn more money, they often want to save less and spend more money on things like clothes, cars, and vacations instead of focusing on an emergency fund, for example.

What are some lifestyle changes to save money?

Some lifestyle changes that can spend less money include eating out less often, driving a less expensive car, and taking fewer vacations. You could also try money-saving challenges.

What are some smart uses of money in daily life?

Some clever uses of money in daily life include investing in a 401k or IRA, buying quality over quantity, and living within your means.

How do you save more than you spend?

Some ways to save more than you spend include creating a budget, tracking your spending, and automating your finances.

Summary

Congratulations! You’ve made it to the end of our article on avoiding lifestyle inflation. We hope you found these tips helpful and that they will help you maintain your current standard of living while avoiding unnecessary expenses. Remember, it takes time and effort to institute new habits, but you will be better off for them once they become routine. So go out there and be fantastically frugal! Just like we know you can be.

What will be the first trick that you use?

Will you start practicing gratitude with Presently?

Or will you get our finances in order with Personal Capital?