Skip Nav
Oscars
A Breakdown of the Oscars Gift Bag Worth Over $200,000 — You Won't Believe What's Inside
Valentine's Day
50+ Free Valentine's Printable Cards That Aren't Corny
Consumerism
51 Affordable Valentine's Day Gifts For Any Type of Guy

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.

Source

Around The Web

POPSUGAR, the #1 independent media and technology company for women. Where more than 75 million women go for original, inspirational content that feeds their passions and interests.

Join The Conversation
graduatedsqueaks graduatedsqueaks 7 years
I think my only lifestyle inflation happened when I graduated and got a job...I actually had money! So dining out didn't matter as much, and I bought more groceries (it helped that my roommate drove to the store and we had a lot more storage). So, there was a lot of initial investment in transitioning to a post-college lifestyle, but I think I've been okay. A good idea (like just_kelly said) is taking the amount per paycheck that your raise has added on and have that portion deposited directly into savings (or if they can't do it, have an automatic deduction for your own savings account). That way you'll still have the same amount of spendable money, but can keep saving money as well.
Powerpuffgirl Powerpuffgirl 8 years
This article comes at the perfect time for me! I have just accepted a new position with a significant increase in salary. I don't want to fall into the trap of spending more because I'm making more. Thanks for this article Savvy!
MandyJoBo MandyJoBo 8 years
I do this all the time. I impulse buy because I can. If I see something I want, I get it.
snowbunny11 snowbunny11 8 years
I have to add though, in response to #1...I would hate always feeling like I'm *just* living within my means like your fiance...I would still want slight cushion after expenses are met, I just meant that I see nothing wrong with "inflating your lifestyle" the more money you make as a principle!
snowbunny11 snowbunny11 8 years
I think that as long as you live withing your means by managing your paycheck well and that you are saving for the future (retirement, emergencies, long-term purchases) that you should spend or donate as much as you want. If this means lifestyle inflation, fine, I mean, why else are you working so hard? I don't think acquiring as many designer bags as you can is necessarily the greatest goal in the world, but if this is what you want to do with your money and you are working hard, really what would be the point of the *extra* saving? We can't take it to the grave and I want my kids to work hard too!! ;) Now...I can't even afford to go out currently or get dental work done, but as soon as I start my new job, I intend to inflate my lifestyle enough to go to the dentist and buy professional clothes at the very least!
snowbunny11 snowbunny11 8 years
I think that as long as you live withing your means by managing your paycheck well and that you are saving for the future (retirement, emergencies, long-term purchases) that you should spend or donate as much as you want. If this means lifestyle inflation, fine, I mean, why else are you working so hard? I don't think acquiring as many designer bags as you can is necessarily the greatest goal in the world, but if this is what you want to do with your money and you are working hard, really what would be the point of the *extra* saving? We can't take it to the grave and I want my kids to work hard too!! ;) Now...I can't even afford to go out currently or get dental work done, but as soon as I start my new job, I intend to inflate my lifestyle enough to go to the dentist and buy professional clothes at the very least!
insanitypepper insanitypepper 8 years
It is difficult not to spend all that new money when you get a good raise or promotion. Especially when you've been putting off so many things you couldn't afford before, like a more professional wardrobe (so people stop mistaking you for the office intern), a trip to the dentist (that insurance is expensive & doesn't provide much coverage anyway), or a new car (finally--power windows!).
just_kelly just_kelly 8 years
I'm getting ready to switch positions (hopefully the offer will come Monday!) and have decided to buy myself a new phone and then get the difference between my pay now and my projected pay directly funneled into my ING savings account.
just_kelly just_kelly 8 years
I'm getting ready to switch positions (hopefully the offer will come Monday!) and have decided to buy myself a new phone and then get the difference between my pay now and my projected pay directly funneled into my ING savings account.
emalove emalove 8 years
I'm guilty too sometimes...
PeachyKeen19 PeachyKeen19 8 years
"I think this also goes hand-in-hand with emotional spending, when people decide to buy things just to soothe a bad day or to celebrate a good day. Days like that can be challenging, but I try to catch myself from splurging and recite the definition of "emotional spending" in my head!"I agree, we all have or do a little bit of that. I know I'm guilty of that at times.
PeachyKeen19 PeachyKeen19 8 years
"I think this also goes hand-in-hand with emotional spending, when people decide to buy things just to soothe a bad day or to celebrate a good day. Days like that can be challenging, but I try to catch myself from splurging and recite the definition of "emotional spending" in my head!" I agree, we all have or do a little bit of that. I know I'm guilty of that at times.
PeachyKeen19 PeachyKeen19 8 years
I hope I can learn to manage my finances accordingly. With my first job I did go a little crazy because I was earning more money than I ever dreamed but luckily I didn't go to crazy and get a car or credit card. Hopefully, I learned from that situation and now that I have had a little bit more work experience and a new job I hope to finally apply those lessons. I HOPE that I am able to live within or below my means :)
PeachyKeen19 PeachyKeen19 8 years
Whoops, I should use the quotes, what I meant is:"I've always heard that the more money you have the more money you'll spend. And I've found it to be true - even if more of it does go towards savings! But my purchases keep getting bigger too - like a HOUSE!"- I think this goes back to Savvy's post. It doesn't matter if you make 20,000 or 100,000 if a person doesn't know how to manage their money they can still end up living paycheck to paycheck. But I agree with you to an extent. When I see the "rich and famous" the cars and homes and things they buy are at a different level, so to someone else they may appear rich but the still have to live within the constraints of whatever bracket their in. *Even so* Regardless if it's a famous and rich or non famous person The savviest individuals are the ones that know that they have to be responsible amd recognize that they can't let their lifestyle become inflated. That = living below our means.
PeachyKeen19 PeachyKeen19 8 years
Whoops, I should use the quotes, what I meant is: "I've always heard that the more money you have the more money you'll spend. And I've found it to be true - even if more of it does go towards savings! But my purchases keep getting bigger too - like a HOUSE!" - I think this goes back to Savvy's post. It doesn't matter if you make 20,000 or 100,000 if a person doesn't know how to manage their money they can still end up living paycheck to paycheck. But I agree with you to an extent. When I see the "rich and famous" the cars and homes and things they buy are at a different level, so to someone else they may appear rich but the still have to live within the constraints of whatever bracket their in. *Even so* Regardless if it's a famous and rich or non famous person The savviest individuals are the ones that know that they have to be responsible amd recognize that they can't let their lifestyle become inflated. That = living below our means.
PeachyKeen19 PeachyKeen19 8 years
I've always heard that the more money you have the more money you'll spend. And I've found it to be true - even if more of it does go towards savings! But my purchases keep getting bigger too - like a HOUSE!I think this goes back to Savvy's post. It doesn't matter if you make 20,000 or 100,000 if a person doesn't know how to manage their money they can still end up living paycheck to paycheck. But I agree with you to an extent. When I see the "rich and famous" the cars and homes and things they buy are at a different level, so to someone else they may appear rich but the still have to live within the constraints of whatever bracket their in. *Even so* Regardless if it's a famous and rich or non famous person The savviest individuals are the ones that know that they have to be responsible amd recognize that they can't let their lifestyle become inflated. That = living below our means.
PeachyKeen19 PeachyKeen19 8 years
I've always heard that the more money you have the more money you'll spend. And I've found it to be true - even if more of it does go towards savings! But my purchases keep getting bigger too - like a HOUSE! I think this goes back to Savvy's post. It doesn't matter if you make 20,000 or 100,000 if a person doesn't know how to manage their money they can still end up living paycheck to paycheck. But I agree with you to an extent. When I see the "rich and famous" the cars and homes and things they buy are at a different level, so to someone else they may appear rich but the still have to live within the constraints of whatever bracket their in. *Even so* Regardless if it's a famous and rich or non famous person The savviest individuals are the ones that know that they have to be responsible amd recognize that they can't let their lifestyle become inflated. That = living below our means.
Knight-Who-Says-Ni Knight-Who-Says-Ni 8 years
I make a point to deposit any "bonus" earnings (this includes birthday or Christmas money, or a year-end work-related bonus) into my retirement accounts, precisely for the reason that I don't need it to live on. I then continue to sock away or spend money from my regular salary as planned. I don't shop much, though. I hate spending money, even for everyday things like groceries.
Knight-Who-Says-Ni Knight-Who-Says-Ni 8 years
I make a point to deposit any "bonus" earnings (this includes birthday or Christmas money, or a year-end work-related bonus) into my retirement accounts, precisely for the reason that I don't need it to live on. I then continue to sock away or spend money from my regular salary as planned. I don't shop much, though. I hate spending money, even for everyday things like groceries.
UrbanBohemian UrbanBohemian 8 years
I think this also goes hand-in-hand with emotional spending, when people decide to buy things just to soothe a bad day or to celebrate a good day. Days like that can be challenging, but I try to catch myself from splurging and recite the definition of "emotional spending" in my head!
UrbanBohemian UrbanBohemian 8 years
This is a really important subject. Since getting my first job and not earning very much from it, I've been more conscious of the fluctuating size of my wallet. I keep my cash flow rigidly steady these days.
mswindang mswindang 8 years
its the control see, u get more u spend more. i try my very best to not do that, but sometimes your hand does the thinking than the brain so i get myself in this situation all the time. i'm really cutting back though.
bfly1133 bfly1133 8 years
I think it is only natural to spend more money when you make more. I also think it's okay as long as you are doing what Savvy suggests....live within your means and are still saving for the long term, the short term, and retirement.
redegg redegg 8 years
I really try not to do this. It is difficult. Staying in the same house helps.
Lilavati Lilavati 8 years
I always get plenty of new ideas about thing to buy. Right now I can't afford a lot of things I want and I'm not talking about anything extravagant (I mean CDs for instance). I know I will spend more when I get a raise (ekhm, a job in fact) and I'm looking forward to it. So that's the state of mind before the raise. If you're after, you probably are consdering living in the "before" style and saving the difference. But "before", there's daydreaming about the stuff you can't afford and making plans for "when I'm rich". You can't eat your cookie and keep it too... It's all about finding the right balance.
Latest Career & Money
X