Dealing with lifestyle inflation.

However, you’re struggling to pay the bills. How can this be? You may be a victim to lifestyle inflation.

Lifestyle what?

Lifestyle inflation is spending more because you’re earning more. While it’s nice to treat yourself every now and then, you’ll blow a big hole in your wallet if you get in the habit of spending more just because you’re earning more.

Living within your means.

Don’t let your money manage you. Here’s how to take back the reins:

• Update your budget: Check for leaks!
• Prioritize saving with every paycheck: Create a goal of setting aside three to six months’ living expenses in an emergency fund.
• Pay off debts and save for your retirement. If your employer has a 401(k)-matching program, take advantage of it!
• Pay yourself first. Have money sent to your savings and retirement accounts automatically.
• Know what’s a want VS a need: Do you really need the newest smartphone or does your current phone work almost as well?
• 30-day rule: If you really want the newest smartphone that will cost you a pretty penny, fine. But, wait 30 days. Maybe you’ll still want that upgrade, but maybe not.
• Save to spend. Wait to buy something until you can pay in full.
• Invest now so you’ll have financial stability later.

👍 Pro-tip: Level up your budgeting with money buckets! Whether you’re starting an emergency fund, saving for a big trip, or budgeting for your bills, opening a separate account for each goal — “bucketing”— can keep you on track.

Inflation is normal.

Lifestyle inflation isn’t always bad. If you’re starting a family, you may need a bigger home. If your promotion requires a longer commute, you may need a new ride. The key to success is for you to be the boss of your money.

When evaluating your new lifestyle and budget, make choices that set you up for financial stability now and in the future.

Not sure where to get started when creating your new and improved budget? We’ve got you covered with this next read: A better budget.