4 Ways to Avoid Lifestyle Inflation

May 1, 2015

Lifestyle Inflation

Have you received a raise recently? Come into an unexpected windfall? Wondering what to do with the extra money?

When our paychecks are bigger or our bank accounts are padded, it’s easy to think of all the ways we can spend the extra money:

Oh, I can finally take that trip. I can go out with friends more often — I’m no longer broke! I can treat myself to dinner out because I deserve it.

Suddenly, the temptation to spend is there almost constantly. That’s why it’s important to know how to avoid lifestyle inflation. Use these 4 simple ideas to make sure it doesn’t get the best of you.

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 take over 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 a List of Your Priorities

Along with not caring what others are buying, you should make a list of your own financial priorities. This will make focusing on your needs much easier, and will help you to avoid succumbing to lifestyle inflation when everyone else is.

When making a list of your priorities, think about what you truly want in life. What brings you joy? What do you feel good about spending your money on?

If you’re having a hard time thinking of things, try an opposite approach and come up with a list of things that have given you buyer’s remorse. You’ll know to stay away from those purchases!

Also, think about things you’ve gotten jealous of recently. Did a friend post a picture of their new car on Facebook? Are you envious of a friend who’s currently on vacation in Hawaii? Did you feel down when a family member mentioned getting a brand new, huge house?

Go through these things and question why you’re jealous. Is it because society says we need these things? Is it because you’re upset your friends can “afford” it, but you can’t? Do you really have a desire for any of these things?

It’s okay to be jealous for a moment, but you should be able to take a step back and rationalize. Your possessions don’t equal what you’re worth. Never feel like you’re “below” people because of what they own and what you don’t.

At the end of the day, lifestyle inflation reflects the rampant consumerism in our society. It’s perfectly okay to step away from it and not get sucked in!

Be Realistic About Purchases

Make another list of the pros and cons of all the purchases you’ve been contemplating recently. We’re going to take a realistic approach to lifestyle inflation for a second.

Let’s use the classic example of a new car. Lots of people want new cars. They don’t have half as many problems as older ones, they’re shiny, they have that “new car smell,” and they have a bunch of upgraded features older cars don’t have.

Dig a little deeper. Realize that new cars come with a lot of added expenses that might not make the purchase look so attractive anymore.

For example, your car insurance premium will likely go up. Two, you’ll have a car payment to deal with. This means less money available in your budget. Three, if the price isn’t rolled into your purchase, you’ll be paying DMV fees to register your car. Four, if you finance your car and make minimum payments, you’re going to end up paying more than the initial price due to interest.

Do you sense lifestyle inflation creeping up on you? When you “upgrade” in life, you’re not only paying the (higher) base price for something, you’re also paying for all the additional stuff that comes with it.

Practice Delayed Gratification and Gratitude

One of the easiest ways to combat lifestyle inflation is to wait things out. By making these lists, you’re forcing yourself to think through your purchases, and you’re also practicing delayed gratification. It’s a good habit to have, as you won’t have to worry about impulse spending again!

Another way to care less about what others are doing? Be grateful for what you have. That doesn’t mean don’t work hard toward your goals, or to stay stagnant. Just be grateful for the current situation you’re in.

Even when things seem bad, you’re still reading this. You have access to the internet, to food, to water, and to shelter. Gratitude can give you the perspective you need to realize that spending on all these things is inconsequential.

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.

FILED UNDER: Blogs, Featured

Most Recent Episodes

Financial Hacks and Habits of the Top 1% (By Age)

ho wouldn’t want to have a high enough income and net worth to be considered part of the top 1%? In this episode, we’ll tell you exactly how much you need to be considered part of the top 1% - and the habits and hacks those in the top 1% used to get there.   In this...

How to Win With Money in 2023!

Financial resolutions are always near the top of the list of Americans’ most popular New Year’s resolutions. Whether you want to save and invest more, pay off debt, or have other financial goals, we will give you the tools you need to win with money in 2023.   In this...

TikToks That INFURIATE Financial Advisors

The most powerful time to get serious about building wealth is when you’re young. So, what is the younger generation learning? Financial Advice (good and bad) is being produced in massive rates across online platforms and TikTok is the new frontier. Is there good...

5 Levels of Wealth AND How to Achieve Them! (2023 Edition)

We believe there are five distinct levels of wealth, but they aren’t solely dependent on income or net worth. We’ll walk you through each of the five levels - including how to know where you are at, how to advance to the next level, and signs you are doing it right.  ...

Average Net Worth By Age in 2023!

It’s time for one of our most anticipated shows of the year: our annual Net Worth By Age show! In this year’s edition, we’ll shared updated numbers and data for 2023 and discuss the most important things for you to focus on in each decade.   In this episode, you'll...

Win Financially During a Recession! (Everything You Need to Know)

The bear market we've experienced in 2022 has been longer than many in recent memory - and some are concerned that the economy may soon enter into a recession. Here's everything you need to know to stay on-track and win financially during a recession!   In this...

The Fed Just BROKE the Car Market! (What You Need to Know)

Car prices have been on a rollercoaster ride the last few years, and it looks like they might finally be coming down. In this episode, we’ll discuss what you need to know about the current car market, pitfalls of buying a car, and how to do it the right way.   In this...

Top 4 Money Mistakes People Make During the Holidays!

There’s a reason why financial resolutions are always near the top of the list in January - many Americans spend the holiday season making financial mistakes. In this episode, we’ll discuss the top money mistakes people make during the holidays and how to avoid them....

Financial Advisors Share What They WISH They Knew About Money Earlier!

Have you ever felt like if you just knew this one thing about money earlier your finances would be in a better spot? In this episode, we’ll share the five biggest things we wish we knew about money earlier!   In this episode, you'll learn: What we wish we knew earlier...