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I felt like Admiral Ackbar; ready for the battle against lifestyle inflation. I had a fleet of fellow rebellion ships, and there was a carefully crafted plan of attack. All I had to do, was show up, and crush the dark side of the force (lifestyle inflation).
Only did I realize, too late, it was a trap.
BEST LAID PLANS
Much of my financial knowledge is built on the foundation of library books. I have watched some training videos on LinkedIn Learning and read some blogs but my financial insight was gleaned from library books.
At my local library, I have read about half the collection of personal finance books. I borrow other books too but I devour nonfiction finance. I wasn’t always like this, but as I became more familiar with the topics, I kept seeing the same stuff come up again and again.
The more familiar it became, the more I enjoyed the content. One of the easiest concepts to understand was lifestyle inflation. As wages go up, so does spending. More here, equals more there. It seems logical and in many ways, expected. I want to increase my wages so I can increase my lifestyle. The problem is that the more stuff I own, the less money I have.
More stuff means more maintenance like when I first buy a phone. I don’t just buy a phone, but it also needs a data plan. Then there is the phone cover and case. I may have to purchase apps or get swindled into insurance. As I become more observant of my spending, I am noticing that upgrading isn’t just the sticker price. There are little purchases too, that add to the overall cost.
But I have read a lot of personal finance books, so I thought I was being smart. After all, I was doing all the right things like budgeting and aggressively tracking my spending. I even calculated my paycheck down to percentages of spending and saving.
Little did I know, I had set my course for a lifestyle inflation trap.
I was looking at my budget and adjusting for a big change, going from full-time to part-time. It would result in some budget adjusting. As I was changing numbers and looking at my expenses, a thought fought through the fog, “Why is my spending so much higher than it used to be earlier in the year?” As I investigated, I realized I gave myself more spending money when my paycheck increased.
It felt like I was betrayed by my best friend.
After all my training, I had fallen into the lifestyle inflation trap and let my spending increase.
WINNING A BATTLE
The damage was minimal since my wages had only increased a few months ago but, it still annoying that it happened in the first place! What good is a library’s worth of knowledge, if I’m not going to use it?!
The course is corrected. I adjusted my budget to fixed amounts. What isn’t being used for sinking funds or monthly expenses is being forced into fortifying my exploration and investment accounts.
The next time I have an influx of consistent cash, there won’t be unexpected trap of lifestyle inflation waiting for me.