Are you living within your means? Are you guilty of lifestyle inflation? What does this mean?
Living with your means is something that our generation is really struggling with. We are all guilt of this. Instead of stress about this, let’s look at a few categories to see if you’re living withing your means or guilty of life style inflation:
Income vs Spending.
How much do you earn compared to how much you spend? We often see celebrities living extravagant lifestyles and we assume that they can afford it because they make lots of money. The thing is that they do make lots of money. Sadly, many celebrities go bankrupt in their later years because their income decreases but their spending remains the same. When winning the Super Bowl or starring in a summer blockbuster film, it’s easy to live a lavish lifestyle. Just like when your business is thriving or you get a super bonus. It’s easy to spend money when you have lots of it coming in. What will you do when the high cash flow stops flowing? Will you be able to live withing your new means?
Spending compared to career.
This is similar to the above point. The only difference is living within your means is strongly tied into your stage of your career. Too often do you hear about entry-level employees that are already attempting to live the “baller” lifestyle. We all want to pop bottles and live it up. Unfortunately, I don’t want to pop a bottle that’s going to cost me a week’s worth of salary to pay for. When starting off in your career or starting your own business, it’s always more beneficial to focus on increasing your income than it is to getting caught up in the consumer world.
I love to travel. I love to go out. I love to dress well. I don’t love to be broke. Too often do I have friends trying to justify ridiculous purchases to me. There’s a major difference between over-indulging and rewarding yourself. I think it’s highly beneficial for all of us to take breaks and take a moment to enjoy life. The problem begins to creep up on those that choose to over-indulge and spend a heavy amount of their income on unnecessary luxuries. A solid dinner at a classy restaurant is a rewarding treat at the end of a long week. Eating out every day can be a financial disaster.
I have friends that refuse to take the public transit. I prefer to drive but when heading out on the town, driving is usually not a bright idea. I don’t mind taking a cab home when it’s freezing cold at night. However, taking cabs around every where can get very expensive. This is where you need to ask yourself if your living conditions are realistic. Eating out can be a time saver. It can also kill your wallet. You need to determine if your living conditions are realistic. What will you do if you lose your job? What if you want to start your own business and experience lean periods?
To summarize this concept, living within your means relates to how you spend your money, compared to how much you earn. We all have different incomes and life situations. It’s all about living within YOUR own means.
The question that remains: are you living within your means?
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