How to avoid lifestyle inflation

Darryl Bachmeier
Sep 4, 2020

Lifestyle inflation means that we will spend more when we earn more. For example, you got a raise and now you can spend more money per month. Eventually, this brings us to severe problems such as having no money until you receive a paycheck or being in severe debt. Today, we will teach you how to avoid it. There are several tips you can use.

Understand lifestyle inflation

The first tip is the most obvious one. You need to understand lifestyle inflation and to consider it as a bad thing. Despite a raise or more money you are making at the moment, you can live worse than before the raise. In other terms, consider a raise or more money you are making in general as something that can make your money better or worse. This isn’t money for fun things that should be spent as soon as possible.

Calculate how the money you will make now

After you get a raise, you will want to throw a party and spend it. After all, you have earned that fun in your life. In reality, you should calculate first. How much money are you making now? How it will affect your life? In some cases, a raise may be very small, so it won’t affect your life dramatically as you may believe. The goal of a raise is to work the same but have more money in your bank account at the end of a month.

Eliminate impulse shopping

Impulse shopping is a severe problem for millions around the globe. Basically, we decide we want something within seconds. In most cases, we do not need that item and we can live without it. The problem here is obvious. You are making more money and you want the things you were unable to afford before. The solution is to transfer money from your checking account to your savings account. This makes impulse shopping harder or even impossible. You can also use various methods to eliminate impulse shopping from your life in general.

Develop short-term and long-term goals regarding finance

Here we have the ultimate step and the one that can make a massive difference. All experts claim the same thing. When we don’t have a financial goal, we will spend more which means we will end up with lifestyle inflation. The alternative is to develop short-term and long-term financial plans. This can be anything. Maybe you will want a new car, or to pay off the mortgage within a year. It is irrelevant. The goal is to have these goals in your life which will help you spend your money wisely.

Have friends with a similar budget

If you spend time with friends who have a much higher budget than you, you will spend more. This is a recipe for lifestyle inflation! The goal is to have friends with a similar budget. If you have friends with a higher budget, you will want to go to more expensive restaurants, do more expensive things and own more expensive products. Friends with a similar budget will help you spend a reasonable amount of money. It sounds easy and it is.

Experience is more important than an item

Now you make more money than ever before. You are looking for a way to spend it. Items and products are the first choice. But, they are the wrong choice. These things can give you happiness for a few hours or a day meaning you will have to spend more money sooner. Things that give you experience, give you happiness for days or even months. The best example is a vacation. You get days of fun and you will always have great memories to remember of in the future. You cannot get this from a new car. You can only get a repair bill.

Avoid a new debt

Now when you have more money, new debt is something you will likely consider. After all, you can afford a new home or a new car. There is no such thing as good debt or even reasonable. It will only make your budget thinner and it will be a massive responsibility. In other terms, you are looking at lifestyle inflation that will last for the next 10-30 years. Do you want that? It is much better to save money on your account than to be in debt.


Lifestyle inflation is something you are likely to encounter today or tomorrow. It is something that should be avoided at all costs simply because you will make more money, but live worse than ever. Ideally, you will use all of these tips at the same time. They are helpful and they will make your life much better in the financial sector. Just because you can afford everything, it doesn’t mean you should.

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