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3 of the Easiest Ways to Manage Lifestyle Inflation

It is not easy to manage your finances, and just because your income has increased, does not mean it will be any easier. Any promotion, living wage increase, or added income is always a welcome improvement. Congratulations! You’re doing something right, and that is cause for a little celebration. But, as it turns out, most people have a tendency to spend more if they have more. This habit results in lifestyle inflation also known as lifestyle creep. It’s when your spending increases along with your income, so you’re unable to save more or reduce more of your debt. It’s a big, and common problem, but these steps below will help you avoid and manage lifestyle creep, and make the most out of your money.

Speak With a Professional

First thing is first: talk to your financial advisor. If you are already working under a financial strategy, that plan will need to be adjusted to account for the added income. Do some math with your advisor and breakdown the new weekly, monthly, and yearly take home numbers. This quick analysis will explain just how much your spending choices should or should not change.

Don’t Take On New Debt

It is only fair that you celebrate your raise, and if living a life of luxury is important to you, that’s completely okay. Do not, however, take on debt in order to live that luxurious life. Just because you can afford a monthly payment, doesn’t mean you can actually afford the item itself. Big ticket, luxury purchases are one of the biggest contributors to the lifestyle creep. They will immediately necessitate a paycheck to paycheck lifestyle, which is exactly what you’re looking to avoid.

Increase Savings

Now that you have extra income, and you’re aware of exactly how that breaks down each week, automate and increase what you’re putting away. It is important to stay aligned with your original savings goals and with more money coming in you’ll actually be able to meet those goals faster if you spend your money wisely. If you weren’t already maxing out your 401(k) options, now is a good time to do that, especially if your company will match your contribution. If that isn’t an option, decide what you’d like to save each paycheck and have that amount directly deposited into your savings account. This way, saving isn’t a choice you have to make, it’s already happening for you and the rest of your paycheck is for you to use as you’d like.

Lifestyle Inflation happens to a lot of people, for a lot of different reasons, but those reasons are not important takeaway. This is a problem that is quite easily managed, by setting up a plan, understanding the numbers, and enabling yourself to successfully save. If you are able to separate needs and wants, the lifestyle creep will never catch up to you.

 

Morris
Morrishttps://etrendystock.com/
Morris is a Technology enthusiast and a writer by night. He has been a part of eTrendy Stock for quite some time and he contributes knowledgeable news articles from the Technology niche. He attended a technical school in Florida.

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