One of my financial goals is to be on the look out for unnecessary lifestyle inflation. It’s inevitable that as your income increases, you now have more opportunities to be pressured to increase your expenses.

Prioritizing Our Spending

We’re no longer college students living on a very tight budget, but we don’t want to spend frivolously what money we do have now. We hoping to watch our expenses on things that don’t really matter to use so we can spend our responses on thing and life experiences that matter to us. Here are some areas where we have to watch our for lifestyle inflation.

  • Cable TV: We were just talking to our friends about this last night. Cable TV isn’t a big deal for us since we don’t really follow many shows. (Our favorites tend to get cancelled.) Instead we spend our money on high speed internet and we create dour own little cable TV bundle to maximize the bang for our bucks.
  • Cell Phone: This expense has grown since we each got our own cell phones. I find cell phones very convenient to have and use. I’m willing to pay a little bit more to get an unlimited data plan rather than fret about going over my plan allowance. We switched from AT&T to Sprint to get a better deal and we’re willing to change companies again if necessary. I do hate the thought of getting an early termination fee, but thankfully we’ve had some good service.
  • Cars: We both own our cars and have no loan payments. While they are not the newest cars in the neighborhood, they’re pretty reliable and pretty affordable to keep. Since car don’t last forever, we have a small car replacement fund that we hope to focus on later this year.
  • Travel: We’re really enjoy traveling, whether it’s a last minute road trip or a planned vacation. We try optimize our spending by focusing on the unique experiences and not just the tours or souvenirs.

How to Fight Lifestyle Inflation

Keep a record of your spending. Identifying the problem is the most important step. If you do not follow this step you are setting yourself up for failure honestly. It’s hard to really assess where your money goes without keeping some kind of record. I like using Mint or Quicken to see our spending habits.

Adjust your plan as your values take shape. Life happens and as you grow and mature, some things will become more important and others less so. When you create a budget or spending plan, be realistic and include splurge areas on things that matter to you.

For example, my husband and I try to watch our spending by asking ourselves – is buying something or upgrading going to bring us closer to our 5 year goals? Right now we hope that within five years:

  • We have no debt except for our mortgage. Currently the only debt left right now is my student loans, which have a low interest rate since I consolidated them.
  • We have a steady mobile income of $50,000/year or more. While this is certainly a decrease in our current household income, if we can have work that can pay the bills and we’re following our passions, then we’re happy.
  • Asking ourselves if this will hinder or hurt our plans allows us to figure out if we really want something or not.  Sometimes you have wonderful opportunities come up that you should try out, but you have to be careful not to get too carried away. We’re trying to simplify our lives to things that matter to us.

    Your Thoughts on Lifestyle Inflation

    How do you keep your expenses manageable? Looking at your expenses, what is important to you?