Creep. Creep. Creep. Is lifestyle inflation creeping up on you? It starts out small. One day you are standing in the toilet paper aisle debating the merits of generic versus brand name and you think to yourself, I can afford this. I just got a raise last month and the hubby (or wife) is working full time now. We can afford better toilet paper. And then it snowballs from there. The next thing you know you’re stopping at Starbucks on your way to work every day and spending time driving through new car dealership parking lots “just to see what they have.” It really can happen that fast, and sometimes you may not even recognize that you’ve succumbed to lifestyle inflation until years after the fact.
Now, I personally think that toilet paper can be one of the categories of product where you get what you pay for, but that’s not the point. The point is that when we start making more money we start rationalizing about all kinds of ways we can spend it. We start rationalizing that we can afford to spend more on things. Brand names or products we never would have dreamed of purchasing back in our “broke” days somehow wander into our shopping carts.
How can you prevent lifestyle inflation? By living like you are still broke, even when you technically aren’t anymore. Well, ok, you can upgrade your diet from 100% Ramen to something more representational of the other food groups (taking care of your body is likely to be a good investment I hear), but otherwise keep livin’ the low cost lifestyle. Here are some ways to accomplish this.
Ways to Prevent Lifestyle Inflation
1) Go shopping with a list. And stick to it. Don’t go grocery shopping when you are hungry- you’re guaranteed to buy unhealthy stuff you don’t need or be tempted to stray from your list. And try not to shop when you’re in a hurry, as you may miss the best deals (am I the only one who has initially missed the cheap generic can of green beans hidden in a location on the shelf where it is not readily seen?)
2) Find a greater purpose for this frugal lifestyle you’re living– WHY are you doing it? Just being frugal for frugality sake is not enough for most people. You need to be able to visualize your dream of early retirement, your awesome goal of debt freedom, or your children graduating from college. Those powerful motivators will help get you through on days when you’d rather just give in to consumer desires.
3) Place visual reminders of your goals around your home so they can easily be seen. You’ve heard the phrase out of sight, out of mind, right? Well keep this one in your mind by placing visual reminders for yourself in strategic places. For example, if you have a problem with online shopping maybe it would help to put a copy of your net worth statement near your computer to remind yourself how badly you want to get out of debt. I’ve known people who place inspirational sayings all over their homes to inspire them to live life a certain way. This is no different.
4) Shopping is not a leisure activity. If there are no necessities that you require, then you don’t need to spend time at a store (unless you work at one!)
5) Adopt a policy of not replacing items in your home until they are completely worn out or no longer working. This includes your car. There is no need to replace items around your home just because there are newer or “better” options available for purchase these days. Here’s an example from my own life: for something like 5 years now I’ve been telling anyone who asks that I’m keeping my crappy car until it has something major wrong with it that is too expensive to fix. I honestly expected that this point would come years ago. It hasn’t. My car now has 217,000 miles on it and is going strong, with no major problems.
6) Stop paying attention to all the shiny “things” that other people may have. Remind yourself that the game of personal finance is about priorities, and there are people out there who just have different priorities than you do. If you wanted to have more debt and less money in the bank you could have more shiny things too, right? But if you’re reading this article I’m guessing you are not the type of person who wants that.
7) Be mindful of the fact that the purchase of certain items can lead to pressure to purchase more items “to complete the picture.” For example, the classic example is the couple that purchases a home in a more upscale neighborhood. That couple may not initially realize that everyone in the neighborhood drives a newer car, all the children in the neighborhood attend private school, and there are countless neighborhood engagements that they will be invited to become part of, all of which include shelling out more cash. And don’t forget HOA (homeowner’s association) fees! The initial purchase of one item, the home, may lead to an increased cost of living for years to come. My personal opinion is that your choice of a home (both the home itself as well as its location) will have the greatest impact on your cost of living going forward- FAR bigger than any other factors.
On days when the going gets hard, I think it helps to remind yourself of the finish line- where you are going with your finances and how great it will feel when you get there. The journey to leading a financially responsible lifestyle can be difficult at times- but there can be great payoff at the end. 🙂
Suggested Reading: Want to learn more about ways to prevent lifestyle inflation and 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. This awesome book uncovers dozens of secrets of wealthy individuals. Hint: Lifestyle and cost of living are a MAJOR factor contributing to their success!!
Do you have other suggestions on how to beat the creep of lifestyle inflation? What are some things you’ve done to keep your lifestyle in line with your priorities?
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