Times are hard and money is tight.
We all know what inflation is and how drastically it affects us, but what about “lifestyle inflation”?
Erika Kullberg, a corporate lawyer with a large following on social media, shared a statement on the term.
It’s the idea that the more you earn at work, the more you can spend – having more money makes us more wasteful of it.
The bottom line is that despite a high salary, you still have no savings because you keep spending more.
So, for example: you could get a raise, assume you can afford a fancier rental apartment and have more money for nice clothes…but that can mean that “extra” money can quickly disappear before you even get anything have possibility to keep it for the future.
This is your very personal lifestyle inflation, also known as lifestyle creep.
Erika writes, “Lifestyle inflation can affect anyone — whether you make $50,000 or $150,000 a year, the key metric is what percentage of your earnings you save and invest.
“Someone making $50,000 a year could save/invest more than someone making $150,000 a year.”
The more someone earns, the more they can spend – this can be a slippery slope to not being able to retire later because money hasn’t been saved or invested.
Some commented on the video: “So true!! Every time I’ve received a raise over the past four years, I’ve logged into my 403b account and increased my contribution percentage, eventually maximizing it.
“That helped me with the temptation to achieve this goal! I’m doing this BEFORE my new paycheck hits my account, so I make sure to increase what I’m paying myself first before falling into full-blown lifestyle inflation.”
Another admitted: “Damn it happens to me – the more I make, the more I spend.”
The key to future-proofing is to save and invest as much as you can, regardless of your salary — and not get too carried away with the big expenses just because your income has increased.
For more money saving tips and tricks, to chat about cash and notifications of offers and discounts, join our Facebook group Money Pot.
Contact us by email at MetroLifestyleTeam@Metro.co.uk.
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