We all know that there are two major determinants of keeping yourself financially afloat, right? You need to keep the income flowing in and you need to keep your expenses below your income. The problem that sometimes arises is this: as we cruise down Success Lane in our chosen careers, this success often comes with greater financial rewards.
Why is that such a problem? Well, in and of itself, making more money is definitely not a problem! At least, most of us would not complain about that one!
The problem arises when we let ourselves and our newly inflated incomes feel that sense of entitlement. You know… that voice inside that says “I’ve worked really hard. I deserve this.” This being anything from a manicure to a new car to a bigger house to a trip to Aruba.
Unfortunately our sense of entitlement can be our financial undoing if we give in to every consumer-driven whim. We’ve all heard horror stories of people who earn amazing incomes yet live paycheck to paycheck, right? It’s because they have been afflicted with entitlement fever!
So how can you keep your standard of living in check as you go forward, achieve career success, and get raises?
7 Ways to (Happily!) Contain Your Standard of Living
1. Keep the same standard of living that you had when you were 28
If 28 was not such a great year for you, pick a different age when you were young and had enough money to get by. Keep that same standard of living no matter what your salary increases to. If you are able to do this, over the years you will be able to save and invest increasingly larger amounts.
2. Bank your raises
You don’t need a new car when your six year-old Nissan runs fine. You need a retirement account and an emergency fund- now THAT will give you peace of mind.
3. Speaking of cars, drive the one you have until it’s dead
Ok, the caveat to this is that it has to be safe. 🙂 But most cars these days will easily run well past 100,000 miles, so take advantage of that. Especially if you have a car that is paid off, enjoy it by keeping it as long as possible!
4. Forget about keeping up with the Joneses
Most of the Joneses in this country are living paycheck to paycheck and have only a pittance in retirement accounts. Strive to beat the Joneses to the retirement finish line!
5. Don’t change your spending just because you got a raise
If you find yourself shopping at retailers that you never shopped at before, you need to ask yourself why. If you are shopping at different stores just because you got a raise, that could definitely be an indicator that lifestyle inflation is creeping in!
6. Continue to enjoy the same low cost entertainment that you enjoyed when you earned less
It’s ok to splurge once in a while! But reading, walking, taking your kids to the park, etc, are all frugal pastimes that are still enjoyable regardless of your salary level.
7. Be grateful for what you have
Be mindful of what’s important in life. In 20 years will you be glad that you bought another purse (or another tool, or whatever)?? Or will you experience more happiness by sending your child to college and/or preparing to retire comfortably?
By the way, my favorite FREE online resource to help manage/budget your money and plan for retirement is Personal Capital (review here). Signing up for a Personal Capital account has really helped us get a better handle on our finances in general, but retirement savings in particular thanks to neat tools like Personal Capital’s 401(k) fee analyzer. They also have all kinds of cool graphics to look at, which is super appreciated by me (I am a total visual person!)
What are some ways that you have found to keep your spending and standard of living in line with your priorities?
Suggested Reading: Want to learn more about ways to contain your cost of living? Check out one of my favorite personal finance books, The Millionaire Next Door: The Surprising Secrets of America’s Wealthy (affiliate link). This awesome book uncovers dozens of secrets of wealthy individuals. Hint: Cost of living is a MAJOR factor contributing to their success!!
Note: This post contains affiliate links.