Lifestyle inflation is when you spend more and more on how you live, and it increases at a rate as fast or faster than your income.
As an extreme example, we all know people who made a lot of money and are broke. There are famous ones like 50 Cent and Mike Tyson that show us that being broke is not just a factor of how much money you make, but also how much you spend in relation to it.
Now I get it. When your income is low and you make a bit more, spending that bit more can make a significant difference in your life. But if you always spend as much as you make forever, then you will always be living paycheck to paycheck.
The things we can spend money on are infinite. Often we think something will make our life better, and it doesn’t for longer than a day, or five minutes. Sometimes our purchases make our life worse.
There is nothing wrong with goals and wanting to do better. Playing a better offense is a good thing. But no matter your income, it’s easy to spend it all – or more.
If our lifestyle consumes all our pay, then when there is a hiccup in the cash flow, we are in trouble. If we dig a hole, then it will take a long time to get out.
Great advice! It can be a hard lesson for some people to learn…if they ever learn at all. I was fortunate to see those examples early in my life when people seemed to “have it all” but lived in crippling debt. There’s definitely a balance between saving every dime and enjoying life but I’ll take piece of mind and stability over a selfish purchase any day. This industry can provide that and that’s something I’m thankful for everyday!
Beside the word “consistency“ in the dictionary is a picture of Larry Janesky!
Thank you, Larry, for being there every day!
Both money and time are finite, spend it wisely.
Amen. Learning to appreciate the simple pleasures of life is a big part of this – the earlier in life you can understand this, the better.
I agree 100%. This is something we see daily with our employees and knowing that they are paid more than fairly it is frustrating to watch and hear. I wish the school systems would teach money management instead of the ” they them BS”. We have had our bankers come in and hold some budgeting trainings to try and help. If we can get one or two to be more responsible with the money they earn I feel we have a win.
I totally agree. There is an important discipline that we should all learn and all practice called “delayed gratification”. Practicing this will keep us out of a lot of trouble, including out of financial trouble.
“It’s not how much you make, it’s how much you save”.
I used to think that rising grocery and food costs was the reason I couldn’t save. While it’s true it’s more expensive nowadays to buy my weekly groceries or eat out with friends, I started tracking my spending much more thoroughly and discovered that my Amazon spending is kind of a big problem.
That really surprised me because I always price compare, so I’d think I’m saving money – but by purchasing a ‘needed’ item right away, I realizes my ‘needs’ were filled with more impulses than I realized. Now, I never buy without utilizing the ‘Save For Later’ feature or leaving an item in the cart for a few days. As time passes, I realize I never needed that ‘necessary’ item after all, it was just a convenience OR if I still needed it, I could choose to buy it or even save for a higher quality version that might last longer. By doing this, I’ve also realized why I had such a hard time decluttering my apartment in the past – it was filled with items I thought I needed, but, in reality, having fewer belongings gives me greater joy and convenience I look forward to.
Congratulations on finishing the Dakar! That is Awesome!
Agreed but I walk to work every day, a coworker drops me off at the end of the day (I own a car but my daughter uses it for her job), she is young and trying to help her get ahead and she lives with us rent free (for now). I feel like I don’t spend much on my lifestyle, I eat at home for three meals a day, and my weekly paycheck evaporates quickly. I think a lot has to do with where you live and the cost of living there. I have a 50×100 lot, no garage, small house, and my property taxes are going up to $12,000, cost of goods is always going up, as well as services within a municipality such as a marina fee for a small 17′ Boston Whaler (a boat within our means) but the municipality wants more dock fees because your property taxes wasn’t enough. Someone is always in my pocket. I was listening to your voice on a CBS advertisement on PLR as I typed this. lol Congrats on your 5,500 mile Sunday drive in the desert. 🙂