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Don’t let lifestyle inflation beat you.

Don’t let lifestyle inflation beat you. Image: Thinkstock
Once upon a time I used to head to the nearest bakery or fruit shop for cheap lunch. A 50c bread roll or banana was sustenance enough to keep me going until I got home to have a decent balanced meal.

Over the years my bun and fruit habit evolved into buying $6 to $7 packs of sushi when I’m caught short without a packed lunch. Why? Because I suffer “lifestyle inflation”, where available income is filled with new ‘essential’ expenses. What was once a luxury becomes a regular part of the budget.

This lifestyle inflation is a vortex that sucks up pay rises.

It can be very difficult for people to avoid the lure of sushi, fancy gyms, dinners out, and other trappings of wealth as their income grows – especially if they didn’t get many luxuries as a child.

We all suffer from lifestyle inflation in some way or other. Here are nine principles to get readers who need it started on some lifestyle deflation.

  • Principle 1: The symptoms of lifestyle inflation are silent. You don’t realise it’s happening until something dramatic happens in your life such as being made redundant or finding yourself suddenly single and reduced to one income.
  • Principle 2: People who suffer from lifestyle inflation often feel broke, no matter how much they earn. It’s not unusual for people on enormous incomes to have no money left at the end of the month for saving. Some $100K+ salary earners have consumer debt, which may shock Kiwis earning the average wage.
  • Principle 3: Think back to your first job. What do you do now that you never would have then? Sure you were on a low income. Yet much of your increased spending since then is probably unnecessary.
  • Principle 4: Lifestyle inflation is okay in moderation. Make sure, however, the percentage dedicated to saving or debt reduction goes up at the same rate as your income.
  • Principle 5: Question every cent you spend. Have you been brainwashed by marketing departments to spend money unnecessarily?
  • Principle 6: Identify where you succumb to lifestyle inflation and choose to keep one or two of these luxuries. Cut the rest.
  • Principle 7: Use your raise to buy yourself freedom by paying off debt, start saving, or increase your monthly savings.
  • Principle 8: Downsizing won’t kill you. I’ve downsized on eating out. It’s now a special treat and I don’t feel hard done by.
  • Principle 9: Fighting lifestyle inflation is a life long battle. I’m fully aware of the financial impact of lifestyle inflation, yet still fall into it when those urges to buy stuff or treat myself overcome me.
Finally, in my defence I reflect on my spending which keeps lifestyle inflation in check when it starts to seep into my life I often ask myself why I “need” or “deserve” XY or Z when I didn’t at age 25 or even 35. That’s a great antidote to lifestyle inflation.

Have your say: Are you wasting money on things you don’t need?

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User comments
The nine principles you have provided in your blog is more helpful in lifestyle inflation. Any one should follow these principles. Nice blog! www.debtbreaker.co.nz
Thanks, Diane, for a fresh, valuable tool for people wanting to get ahead financially.

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