Lifestyle inflation is the process of how we adjust our spending when we suddenly have more money than we are accustomed to. Although lifestyle inflation can be handled responsibly, most of the time people refer to it as reckless spending and the habits created. I get it. It feels great to be able to reward ourselves by allowing us to do the things we deprive ourselves of. Buying lunch while at work, purchasing a new tv or even getting a massage in Veilstone City. If we don’t catch it early, these little rewards become part of our everyday lifestyle and can slowly damage our finances like a sand tomb.
We are going to run into lifestyle inflation no matter what, and it is our job to prepare for it. Back in September, I received a $3/hour raise with the requirement to work a 40 hour week. This gave my weekly paychecks an approximate $100 boost, after taxes. Having an additional $400 a month to spend led to a sudden battle with lifestyle inflation. The way I battled and caught lifestyle inflation in five steps was to relax, aspire, reflect, strategize and stay calm.
After I got my raise the first thing I did was breathe. I took a minute to relax and appreciate my reward for working so hard. I knew that a few of my money stresses would finally be relieved. Before my raise, I was using my five-week months to stockpile rent money to help pay for the four-week months’ rent. It was frustrating that my budget couldn’t sustain my rent any other way. The raise money also meant that I could pay my credit cards’ amounts due without using any of my tricks.
Once I felt the relief, I needed to review my goals to find productive ways to reward myself. My largest, current goal has been to clean up my finances for my family and our future children. Not only are we going to need some amulet coins and happy hours for my husband and me to have children, but I also don’t want to leave my family with my debts. My financial notebook brick breaks my goals into saving and debts.
My first savings goal is to build a barrier of one month’s rent just in case I become unemployed. I also want to slowly grow my emergency savings to use for real emergencies, not “poor planning” emergencies. Lastly, I want to keep contributing something to my retirement account ever since I reached my original goal of opening a retirement account before I turned 30.
My debt goals are pretty basic. I want them paid off. My student loans have been on a meal plan for the last four years, with a few minor adjustments. At the time of my raise, my goal for my credit cards was to get a wrap on my credit card usage with the help of PP.
As I read over my goals, I could feel the inflation shadow-sneaking behind me. After I knew how I wanted my inflation to help me with my goals, I then reflected on my lifestyle of that time. I wanted to discover if any changes needed to happen and I felt I really didn’t.
In January 2017, I experimented with reducing my weekly grocery budget from $30/week to $25/week. By September, I had learned how to live on $25/week for groceries and saw no reason to change it. I thought about restoring it back to $30/week, but I was happy, healthy and wanted to use that extra $5 for other things.
There were a couple other lifestyle upgrades that I considered but decided I could live without. A gym membership is nice, but I would rarely walk the 5-7 blocks; I barely workout in my living room. I could buy lunch for work more often, but one meal is about one-third of my weekly budget. (Plus, buying lunch at work was part of what got me into my current debt situation in the first place.) I even investigated updating my old devices, but they were working fine. Sure, two months of saving that extra $400 could buy a new phone, but my phone had just been refurbed in April. I also didn’t want a new 3DS with the idea that the Switch might secretly be its replacement.
I have learned over the years that my money needs a purpose, or it would be gone with a smoke ball. I knew adjusting my budget was the best way for me to capture and train my lifestyle inflation. So, I sat down with my slowking, Diary, and my boldore, Budget to strategize how we could apply the relief from my raise to my lifestyle to reach my goals.
I find it important to stay calm when I encounter lifestyle inflation, so I don’t astonish it. I realize that it’s easy to get excited and go on shopping sprees, but this causes it to attack. This is why I developed a strategy to suction cup myself to, to keep me calm and focused. My problem is that I know I have extra money, my mind recognizes that I have extra money and yet, I continually tell myself, “There is no extra money.” Those first months I was good, but I was charmed into buying a Switch by November. Since then, I have felt the inflation by paying a little more for haircuts and paying for pizza with cash. Thanks to my lifestyle inflation strategy, adding fun money savings has made these two lifestyle choices a possibility.
After my raise, I have encountered another lifestyle inflation and a baby lifestyle inflation, AKA lifestyle creep. In December, my student loans’ required payments dramatically decreased, and I responded by adjusting my budget and creating a temporary student loan food plan for 2018. I started experiencing “lifestyle creep” in mid-January when my paychecks surprised me with an approximate $20/week speed boost due to the tax bill signed in December. I am currently evaluating how to accommodate this boost in March’s budget.
Although lifestyle inflation is inevitable, if we catch it, we can train it to serve our goals instead of our wants.
How has lifestyle inflation affected your life?
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