Lifestyle inflation

Savvy ATM: Your Money, Your Lifestyle

Have you heard of lifestyle inflation? It basically means buying things just because you can afford them. Think about it like this: You worked relentlessly over the past year and got yourself a sweet raise. You then spend according to your new salary and don't save any more than you did before you got the raise. Sound familiar?


I'll admit that I've succumbed to lifestyle inflation in the past, though only in very calculated amounts. For example, I got a raise and moved out of my shared apartment in to a more expensive apartment on my own. While I knew I'd be barely living within my means, it was an important move for me and I told myself I'd only live there for a year. And that's just what I did. If I hadn't ended it then, my savings account would be pretty much non-existent by now because it wasn't a sustainable situation.

Lifestyle inflation becomes a problem when your spending levels can't realistically be maintained for the long term. Next time you get a raise, ask yourself if you could have lived without it. Then, buy yourself a pair of high quality power heels that will last a while and put the rest in to your retirement and savings accounts.

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