“The Costs of Keeping Up: How to Avoid Lifestyle Creep and Live Within Your Means” 

The joy of gratifications

At long last, the promotion you’ve been yearning for at the workplace has been awarded. You’ve had a raise in salary, and bonuses paid, and the money has started flowing into your accounts. I guess this is the time to go shopping, take a luxury vacation, sign up for the best pay TV service, redesign your home’s interior, and get that dream car.

An upgrade is not a bad idea. After all, you have earned it. However, the moment is short-lived because your expenses creep up on you sooner than you expect. Once again you are cash-strapped with little or nothing to save or invest.

“A wage raise is not a justification to acquire the newest trending gadget, change your car, or throw a big party for your friends to adore you. As a young man, it is better to build liquidity and invest wisely now instead of using every extra cash you earn to engage in impulse buying” “ a retired senior public servant once advised me.

How do people get there?

This is referred to as lifestyle inflation also, known as lifestyle creep. Lifestyle inflation is the increase in spending that occurs as a result of increasing income.

We are thrilled when our income rises, receive money gifts or secure a new contract that rakes in some extra cash but it also fuels our want for additional material possessions.

It is easy to fall victim to lifestyle inflation, especially when you can use your increased salary to justify your need for a new automobile, fashionable handbag, or upscale treatments.

In reality, no matter how much money you make, it is very impossible to go ahead or be able to prepare for your financial future if you are spending all the additional cash you are earning. Living beyond your means limits your ability to build wealth and keeps you in a cycle of poverty. Money spent today is less money for your retirement.

A typical case of lifestyle inflation

For instance, your present position pays $ 3,000 per month. You were fortunate to find a new position paying $ 5000.00. Instantaneously, you acquire the taste to frequently eat out, purchase a pricey watch and phone, locate a more expensive residence, and generally purchase high-end items to reflect your ostensibly recent status.

Nobody can criticise you for rewarding yourself or choosing your priorities in life, but the question is whether the purchases were deliberate. Was that expense originally planned for in your budget? Is it a need or it is a want that has been sparked by the extra money’s availability?

Causes of Lifestyle Inflation

There are several reasons why people may inflate their lifestyle:

1. Aside from an increase in income or salary that often causes people to inflate their lifestyle expenses, social pressure and comparison also play a contributing role. It is not uncommon for people to want to match up with their neighbour’s and peers’ spending habits. For example, once their neighbour buys an air-condition they must automatically replace their ceiling fan with an air-condition too. They want to dine in fancy restaurants like their peers do without considering their disposable income. They want to keep up with the Joneses.
2. Also, most people also lack the financial literacy and education to enable the to make sound decisions on spending and saving hence conspicuous consumption. They can’t tell between needs and wants. Without a basic understanding of personal finance, individuals may have difficulty making informed decisions about spending and saving. They can hardly identify financial fraud and often fall victim which jeopardizes their situation.
3. Additionally, most people want instant gratification. People may prioritize short-term pleasure over long-term financial security, which can lead to overspending and an inflated lifestyle. After all, you only live once they say as they part away with money that can be saved for tomorrow.
4. Finally, a lack of budgeting and financial planning plays a critical role. When individuals lack budgeting and financial planning, they may have a tendency to spend money impulsively or without considering the long-term consequences. This can lead to profligacy and an increase in expenses, which can contribute to lifestyle creep.

Without a budget, it can be difficult to track where money is being spent and to identify areas where expenses can be reduced. This can make it easier to justify excessive spending on non-essential items and services.

This can also lead to financial stress, and debt eventually which can negatively impact their overall well-being. It’s important for young people to be mindful of their spending and to create a budget that aligns with their long-term financial goals.

It is important to recognize that lifestyle inflation can have adverse consequences on an individual’s overall financial well-being, and it’s important to be mindful of your spending and have a plan in place to avoid it.

How can you overcome lifestyle Inflation?

There are several ways to overcome the tendency of your lifestyle creeping up on you:

1. Set financial goals: Having clear financial goals, such as saving for a down payment on a house or building an emergency fund, can help you stay focused on what’s important and resist the urge to spend money on unnecessary things.
2. Create a budget: By creating a budget, you can see exactly where your money is going each month and identify areas where you can cut back on spending.
3. Live below your means: Instead of spending all of your income, try to live on less than you make. This will help you save money and build a financial cushion.
4. Avoid lifestyle creep: Be mindful of the things you are buying, and try to avoid buying things just because they are trendy or because everyone else is doing it. Be frugal and question every expense. You can have a scale of preference to guide you to buy only your most pressing needs relegating wants to the bottom.
5. Avoid debt: Try to avoid taking on new debt, and work to pay off any outstanding debt as soon as possible.
6. Automate saving: Set up automatic transfers from your checking account to a savings account so that you’re saving money without even thinking about it.
7. Review your expenses regularly: Regularly review your expenses to see where you can cut back and ensure you are sticking to your budget and saving for your goals.

Ultimately, the key to overcoming lifestyle inflation is to be mindful of your spending, set financial goals and stick to them, and make a plan to achieve them. Aim for a good life today and a better life tomorrow instead of the popular life now.