Lifestyle inflation is a real thing and it’s pretty tricky.
If you’re getting ready to get a big raise or bring in more money here’s how you prevent lifestyle inflation.
Send the Extra Money Straight to Your Bank Account
If you know exactly how much extra money you’ll be dealing with (don’t forget to subtract taxes) and how often it will be coming in one of the easiest ways to prevent yourself from spending it is to send it straight to your savings or investment accounts.
If you don’t see the money you’ll be less tempted to spend it and likely forget about it. (Well, that is, until you go check your savings account in which you’ll be pleasantly surprised with its growth!)
Send the Money Toward a Goal
Much like the savings route you could also have your money automatically shifted toward another goal like paying off your mortgage or paying down another type of debt.
Live on a Fixed Budget Each Month
Another way to always prevent lifestyle inflation is to adhere to a strict budget each month. If you spend the same amount of money month in and month out you won’t need to the extra money when it’s in your bank account.
While most people don’t have the discipline to do this (or the foresight) it is an option if it fits your personality and circumstances.
Or…….Inflate a Little
I personally believe that there’s nothing wrong with a little lifestyle inflation every now and then. When I was earning a lower income there were a lot of things that I wanted to have but simply couldn’t afford. As my income grew I allowed myself to inflate my lifestyle a bit.
The trick here is to not go overboard. As your income increases you can inflate your lifestyle a bit by putting money toward the things you want while still saving the other portion.
Bottom line: It’s completely possible to avoid lifestyle inflation and it’s also okay to allow yourself a little wiggle room.