Lifestyle Inflation Will Keep You Broke (No Matter How Much You Earn)
Making this single mistake could keep you living paycheck to paycheck forever even if you’re making millions of dollars per year. Lifestyle creep or lifestyle inflation is a problem almost everyone experiences. Whether you’re a recent college grad with a first real job, an entrepreneur with a growing business or you’re climbing your way up the corporate ladder, when you begin earning more money it’s hard to gauge how much is wise to spend. The problem continues to present itself when a raise, promotion, extra income or sudden windfall arrives. As people gradually get used to a more expensive way of living, budget friendly meals and value priced clothing loses appeal. The extra income becomes disposable income, and investments and savings often lose priority. Thankfully, it’s easy to recognize this behavior so you can avoid it, allowing you to build incredible wealth and reach financial freedom so you can retire instead of staying broke forever….(read more)
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Lifestyle Inflation Will Keep You Broke (No Matter How Much You Earn)
We live in a consumer-driven society where the pressure to have more, do more, and be more is ever-present. It’s easy to fall into the trap of lifestyle inflation, especially when our income increases over time. However, no matter how much you earn, if you succumb to lifestyle inflation, you will find yourself constantly struggling to make ends meet and never getting ahead financially.
Lifestyle inflation refers to the tendency of individuals to spend more as their income rises. We often start small, indulging in a few luxuries or upgrades here and there. However, this pattern can quickly snowball into a lifestyle that becomes difficult to sustain financially. As we earn more, we upgrade our car, move to a larger house, and dine out at expensive restaurants. These choices may seem harmless in the short run, but they have long-term implications for our financial health.
One of the main reasons lifestyle inflation keeps us broke is that it outpaces our income growth. We may receive a raise or start a higher-paying job, but as our expenses increase, it feels like we’re constantly treading water. With each pay raise, our expenses rise in tandem, leaving little room for savings or investment. We become trapped in a never-ending cycle of working harder and earning more, only to spend it all on increasingly expensive lifestyles.
Furthermore, lifestyle inflation hampers our ability to achieve our financial goals. Whether it’s saving for a down payment on a house, starting a business, or building an emergency fund, these aspirations require discipline and financial stability. However, when we succumb to lifestyle inflation, we divert our resources towards immediate gratification rather than long-term financial security. We become slaves to our desires rather than master of our finances.
To break free from the cycle of lifestyle inflation, it is essential to evaluate our needs versus wants. We need food, shelter, and clothing, but we don’t need the latest gadgets or designer clothes. By distinguishing between necessities and desires, we can make better financial choices that align with our long-term goals instead of fleeting pleasures.
Moreover, budgeting is crucial to avoiding lifestyle inflation. Creating a realistic budget allows us to track our expenses, identify unnecessary spending, and prioritize saving and investments. It’s important to allocate a portion of our income towards savings as a safeguard against unforeseen expenses or future financial ambitions.
Building financial literacy is also vital in combating lifestyle inflation. Understanding the basics of personal finance, including investing, compound interest, and debt management, empowers us to make informed decisions about our money. Educating ourselves and seeking guidance from financial professionals can help us navigate the complexities of personal finance and make sound financial choices that support our long-term well-being.
In conclusion, lifestyle inflation is a slippery slope that can leave us constantly broke, no matter how much we earn. By resisting the urge to upgrade every aspect of our lives as our income increases, we can maintain a balanced financial foundation that supports our goals and aspirations. Controlling spending, budgeting wisely, and investing in financial literacy will ultimately lead to a happier, more secure life, independent of our income level. Let’s strive for a life of financial freedom rather than being trapped in the never-ending cycle of lifestyle inflation.
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In my job I see lots of different peoples bank statements and it’s unbelievable the amount of time I see people earning £80k+ but constantly in their overdraft and constantly spending over £5k+ a month. Money is not the solution to all your problems if you don’t budget. You get a pay rise, you spend it all. Budgeting is key.
I was advised to diversify my portfolio among several assets such as stocks and bonds since this can protect my portfolio for retirement. I'm seeking to invest $200K across markets but don't know where to start.
When you were earning less, you were actually saving more, but when you are earning more you are saving less.
I earn 150k a year and I live pay check to pay check. I chose to invest and save 60% of my income and spend whatever is left. I hope the sacrifice is worth it
I still imagine the day when I had my first job. Now I'm at almost 3x. If only I'd spend the same way I did when I started working.
i live in the uk and earn around 1.2k after taxes and ive been only eating ubereats for a couple months now, i know this is hurting my pockets but havent came around to making my own food so this is something i will tackle asap
“the rich DON’T work for money, they make their money work for THEM”
—Robert Kiyosaki
Well, a quarter of the people in the world living below proverty line.
Basically they drink mud, skipping meals, wore worn out clothes, and cannot access medication.
There's nothing wrong to increase your lifestyle if that's happen with you.
You deserve atleast better life.
My advice to everyone is to invest in cryptocurrencies especially Bitcoin as it may rise higher than this very soon and you will wish you didn't miss this opportunity
Budgets are important but remember to give yourself a miscellaneous amount each month just in case you want a little treat. Having this has helped me so much instead of just being stressed I was able to put 100 each month just for random things into my budget. Whether it’s for eating out or a drink it’s helped minimise the risk of breaking my budget.
History proves that wealth always concentrates until it's untenable for the lower class then they eat the rich and the cycle repeats.
I've been realizing this, a lot of my money goes to my hobbies and while my hobby is great, it usually takes priority, I also eat fast food pretty often which I know isn't healthy but it's surprisingly expensive, meals from these places are usually 10$+ and spending 50$+ a week when groceries would be cheaper, I've also been thinking about putting more of my money into investing and other things, maybe I won't be full on "crypto bro, take me to the moon" type shit but put money into stocks and looking into the stock market.
"Satisfaction doesnt come from making a purchase, it comes from the ability to know that u can purchase that particular item"
Appreciate your video, it's really helpful!
$32,000 returns in just 16days, my financial life is totally changed
My lifestyle creep went to better funding savings like car maintenance and clothes for the family while adding more to brokerage accounts etc. It still feels like we’re on the fringes though. I just got quoted $200 a month for kids swimming lessons smh.
Uncle Sam is the biggest killer to your income.
The wisest thing that should be on every wise individual's list is to invest in different stream of income and don't depend on the government to bring in money especially now the pandemic is hitting the economy
Most people don't make enough to enjoy investing and spending on things they like..it one or the other
The main thing… never marry a woman. You will thank me later…
Plan it or spend it
Will be 59 y.o. soon with wife and 2 older kids. Long time ago when in my late teens decided not going to play the game of keeping up with the Joneses or even members of my family circle as learned that all material possessions can only give you so much happiness no matter what it is. So never cared for designer or luxury brands when it comes to my clothes, cars, watches, phones, etc. House mortgage fully paid off 12 years ago, all 4 vehicles fully paid for. My retirement since 2016 is financially secured and set. No regrets at all as no need to impress others, who cares what they think.
Nice video! I was able to build a big income stream investing with a professional broker mrs Helen her strategies are great
A quick rule of thumb is to pay off all debt and your house as quick as possible, so as your income increases so does your debt and house repayments thus making you more wealthy
The greatest wealth generator is never getting married or having kids!
That's because these people are not satisfied with their life. Spending is use to compensate for what's missing.
Hi Chris! Would love to hear your take on what mortgage rates will do next year after the Fed’s announcement?
had a chance to say mo money mo problems
What about just regular inflation… thanks Brandon!