Life gets more expensive over time. It just does. While I tell my clients to watch their lifestyle inflation, it’s important to acknowledge that life can and does still change over time. More important is that those changes can drastically influence your finances. There are a myriad of reasons why life can change. Sometimes these changes are within our control and sometimes they are not. Either way, your budget needs to balance.
As much “fun” as I had figuring out how to live on $900/month 10 years ago, I don’t want or need to live like that anymore. It’s also safe to say that my life is drastically better for not having to work 2 or sometimes 3 jobs at a time to even make that much. Life has changed for the better.
There’s a big difference between improving your life and lifestyle inflation. To me, the difference is a combination of added value and want vs need.
Improvement versus Inflation
Ahhh, the age of question of “Do I want this or do I need it?” Answering this question is extremely important in life and in budgeting. Do you need another streaming service or is it just something you want? For most this one is a pretty easy answer. However, each person needs to be able to answer this question for themselves.
On top of the want versus need decision is the question of added value. For example, the amount of value added by moving out on my own was huge. Technically, did Kayla and I need to move from our studio apartment into the two family home we bought a few years ago. No, but we were able to set ourselves up for success later on in life while also improving our day to day lives. We also improved the lives of our pets, who were in themselves a lifestyle improvement for us.
The key is only you can determine what truly adds value enough to turn a want from life inflation to lifestyle improvement.
My point is that the difference is really in being intentional. If you really think about it and curate your life to what gives you the most added value in your life, then those are improvements. If you notice that your expenses keep increasing, but you don’t know where the money goes the odds are pretty strong that you’ve gone through lifestyle inflation. Sometimes called lifestyle creep because of how it tends to creep up on folks, it’s easy to see how. There are so many cheap subscription services that make it easy to sign up for something and forget to cancel it later on. This is why it’s important to check your spending either on your own or through a free service like Mint or Personal Capital.
Sometimes Life Happens
No matter your best laid plans, sometimes life just happens. Say you had an agreement with your landlord for a fixed rent and they sell the home, forcing either your rent to increase or forcing you to move. While, this is not within your locus of control, your reaction is. On top of that, having one or more levels of financial security allows you the time to be intentional even when life doesn’t go your way.
Let me know a time when you intentionally made the more expensive decision to improve your life in the comments below!