Three Steps for Coping with Lifestyle Inflation

Lifestyle inflation, at its core, is the adjustment of spending money on unnecessary items as your income increases, such as clothes or going out to eat more often. It’s a subconscious activity that, if prolonged, can lead to financial issues and instability as you run the risk of your expenses outweighing your income.

This concept of spending all or most of what you’re making is referred to as “hedonic adaptation” or the “hedonic treadmill.” As noted by Wikipedia, “as a person makes more money, expectations and desires rise in tandem, which results in no permanent gain in happiness.” In other words, spending more money isn’t going to make you happy, but it could make you more in debt. 

With many teenagers getting their first jobs and first taste of money, the urge to buy whatever you want sets in, but is an unrealistic standard because you’re basically living for free. At that age, you have no significant bills to pay since you’re probably living with your mom and dad, meaning you have no real concept of what it costs to live. However, this habit can still persist even when you have bills to pay if you don’t notice the signs. 

So how to avoid falling victim to lifestyle inflation? These three steps can help keep it at bay.

1. Beware of impulse spending

Recognize that this is the unplanned decision to buy something simply because you want it, not because you really need it. The only way to overcome impulse spending is to ignore it outright. You have to get over the temptation and accept the fact that you’ll be fine without whatever it is you want to buy. “If I know I don’t have money to spend, I make sure to leave my purse behind in the car,” said As MacKenzie Morris ‘20. Sophomore Nora Wells has a more extreme idea for dealing with the issue. “Get yourself an electric collar and give the remote to your friend,” she said.

       2. Rewire your brain

The best way to remove lifestyle inflation is to rewire your brain. When you get your next paycheck, don’t think of it as money to spend, but money you’re being paid not to spend. For example, instead of seeing a nice jacket that costs $50 and thinking “I can buy that,” look at it like you’ve been paid $50 to not to buy that jacket. It may sound simple on paper, but it actually works.

        3. Budget yourself

It’s okay and important to enjoy yourself, just not all the time. Most people don’t realize how much they truly spend, which in return causes lifestyles to inflate. So always try to keep track of your spending by budgeting your fixed costs and planning for your variable costs. Fixed costs are bills, such as your rent or car payments, that are going to stay the same on a consistent monthly basis. Variable costs, which are usually unpredictable and can vary more according to need, like food, clothing, and entertainment. However, they can be controlled to an extent and save you in the long run.

For an idea of other ways to establish a budge, check out this link.

Just like the economy, your lifestyle won’t always cost the same and in some cases a little inflation isn’t a bad thing. Just don’t let it get out of hand.