Lifestyle Inflation – How It Can Sneak Up On You

Many of us know that a good way to increase net worth is to not start spending more every time we get a raise. For me, this means that in my monthly budget, it says “Income” on one line, and then below that, it says “Raise.” I don’t even consider the raise money to be part of the income I have available to spend each month; I save it all.

Even if you make a concerted effort like I do to avoid lifestyle inflation, it can still sneak up on you in subtle ways. You get a nice new pair of pants, only to get them home and find that you don’t have a single shirt that is nice enough to go with them. You’ve already gotten attached to how great you look and fe


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8 Responses to Lifestyle Inflation – How It Can Sneak Up On You

  1. disneysteve says:

    Very true. I like the term “lifestyle inflation”. I think we all do it to some extent and that isn’t necessarily a bad thing. I wouldn’t want to be living the way I lived 20 years ago, with hand me down furniture, trash-picked stuff and low quality everything. At the same time, we try not to be upgrade-happy, always wanting newer better models of things. I think there needs to be a balance to where you don’t feel deprived or embarrassed or ashamed to have guests come into your home.

  2. GTE says:

    I read somewhere in the blogosphere (sorry, can’t remember where at the moment) that the best piece of financial advice someone had received was to live like a student for 5 more years after graduating college.

    The point is that I really didn’t feel deprived as a college student and my 10×12 dorm room (shared with a roommate) was good enough. Somehow, years later, I’m living in a 4BR home where my bedroom alone is twice as big as my dorm room was, and can’t imagine moving to a much smaller home.

    It seems like it’s easy to let our lifestyle creep up and almost impossible to move it back down, so the best way to be frugal is to try your best not to let your lifestyle creep up in the first place.

  3. baselle says:

    What you describe is also called the Diderot effect, after his essay _Regrets on Parting with My Old Dressing Gown_.

  4. David says:

    great point talking about making purchases count. I found this is very important when buying clothes and electronics. If you buy something cheap and it doesn’t last long you probably will pay just the same or more as buying one very high quality product. A good example is dress shoes for men.

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