Lifestyle Inflation Sucks
Lifestyle Inflation is what happens when unnecessary spending balloons to match a growing salary. Essentially, you start to spend more in everyday life without ever realising!
Do you remember the days of being a student? If they were anything like mine, loan day was a good one… A couple of heavy nights out would follow and a big food shop. Regardless of your situation – whether you had a job or not – I’m willing to bet that you lived off a lot let money back then than you do now. While you might argue that ‘real-life’ comes with more financial responsibilities, take a few minutes to consider areas of your life that have become more lavish for less justified reasons….
Probably an area we are all guilty of increasing our spending in relative proportion to our income. In student days, staple foods were adequate. Rice, beans, bread, mincemeat etc. sufficed. As we transition from student life into a graduate life, food is the first area that begins to inflate. For some it inflates only slightly (I count myself in this genre) – we buy better quality meat and perhaps organic vegetables; or at least fresh instead of frozen! For others, food spending gets freaking massive… like totally off-the-chain. I see so many of my friends Facebook pictures in fancy restaurants and know that half of them don’t think twice about spending £5 on a sandwich for lunch… their salaries allow them to do this though right?
What’s more, this only gets worse with time. Someone who once spend about a pound on dinner is thinking nothing of spending tens if not hundreds of times that on just one meal sitting…. it still ends up in the same place people!
OK so when you were a student you probably drunk a lot more than you do now… or at least most of us did! Would logic then not suggest that our spending in this category should go down? NOT if you are going to spend £10 a drink on those fancy cocktails and buy that expensive wine. Just because you have an expensive wardrobe, it doesn’t mean you need to drink fancy Eastern European beers that you can’t pronounce in an overpriced garden all afternoon! As our earnings increase, so do the venues that we attend… what once got you ruined for a week will now only get you tipsy!
This is my pet hate!!!! Just because you can get approved for a £30K car loan and buy yourself a nice little sports car, it doesn’t mean that it is the right choice to make! I cringe as I see my 25 year old ex-classmates pose with their little soft-tops…. Is that 5 year car loan really worth an extra few seconds to get to 70? Do you even realise the increased fuel, insurance and servicing costs that come as a consequence… I thought not!
So Mr SavvyScot, What is the Right Thing to Do With a Payrise?
This is SIMPLE….. Save it… pretend that it didn’t exist. It is the only way to stop your lifestyle accidentally becoming inflated (unless you have serious self-discipline). Most people use how much money they have left in their account as a measure of how much to spend. Regardless of how many pay rises you get, this is only going to make you spend more!
With the interest rates at an all-time-low, those of you who are lucky enough to have a mortgage should concentrate on smashing out over payments. Putting your salary towards your mortgage may not make a difference to your pay packet – but it will sure as heck make a difference to your mortgage balance!