Lifestyle inflation happens when your increase in income is followed by increase in expenses. Others write articles on how to avoid it but in my opinion, it's inevitable. Changes in work and family conditions will cause it to inflate in a way, like buying a family car or moving to a bigger house. Besides don't we all work hard to elevate our standard of living?
After college, I landed my first job as a purchasing staff in a manufacturing company and believe it or not, I only earn between P6,000 - P10,000 a month including overtime. Now I'm earning roughly three times more than that but I have no investment and P20,000 behind my targeted personal savings plus a personal loan.
So where does my money go? How was I able to manage living with only that much in the past?
I chelked my credit card billings, some receipts and here's what I found.
I've been eating on restaurants regularly, places I don't used to go and buying things implusively; Not to mention that I averaged into buying a pair of footwear a month last year. My credit card and phone company are also calling me because I'm behind paying my bills. Mostly I was busy and didn't have time to visit the bank but I never worry about it because I know I can pay even with interest. A bad attitude towards money.
I've been hit by lifestyle inflation in a bad way.
How can I say so?
1. Although I'm capable of meeting my obligations, I wasn't able to build up my wealth. It either went down the drain or stuck in my closet.
2. I don't differentiate my needs and wants. It's like when I feel problematic, shopping becomes a need and you're probably justifying it now.
3. I'm living beyond my means and counting on money I will receive beyond my actual salary as part of the budget to pay off my bills.
4. My expenditures is not directed towards any goal nor purpose that would actually elevate my way of living.
I'm not in trouble yet but if this continues I may be and its all because I wasn't paying attention to my money habits.
Lifestyle inflation is part of our lives and cannot be avoided but it can be managed. If you feel you're on the same boat as I am, join my journey as I try my best to reach financial freedom. Let's act now before it's too late.