132. Lifestyle Inflation
When to Embrace it vs How to Avoid It
When I first moved to San Francisco, I had three roommates and slept in a dining room that was converted to a bedroom. It wasn’t that bad minus the fact that the overhead lighting hung low and occasionally a taller person would run into it. Because we always had friends visiting, it seemed at any given time there were 6 or 7 people living in our home and sharing a bathroom with the housemates.
I loved it! It was my first time living in a city and I was happy to keep my housing costs low and be surrounded by people at all the time.
Almost ten years later, I can’t imagine living with anyone but my current roommate, Sammie. Yes, most of the time a one or two bedroom is more expensive than splitting with multiple people, but this is an example of lifestyle inflation I don’t mind. I’m happy to embrace my need to be alone, even if that means forking over more dollars for rent.
Lifestyle inflation or lifestyle creep is when your different costs slowly go up over time as you make more money or start to get a taste of the finer things. Housing is a big one thing to be mindful off. Maybe you would’ve been happy with a small house in the burbs, but are now eyeing bigger places because everyone you work with is buying in a bougie neighborhood and you feel you need to as well.
In this episode of Build A Wealthy Spirit, Sammie and I discuss Lifestyle Inflation because we are starting to think about moving out of our low cost of living, small desert town. It’s inevitable that no matter where we go in the United States, our cost of living will go up. However, we’re hoping that being mindful of that will help us make smart financial decisions.
We look at three ways to avoid lifestyle inflation:
Look at the big costs: housing, transportation and food are the biggest costs for most people in the United States. What do you value? We have gotten used to cooking at home and having a limited number of places to eat. So one thing we want to avoid is raising our costs by eating out all the time.
What are your projects or priorities over the next quarter? Those may be good things to invest in, if you know you want to focus on improving a skill or in Sammie’s case, taking a breather and investing in self care. Beware though, a vague plan like self care can suddenly turn into greenlighting every whimsical purchase!
Finally, avoid lifestyle creep traps like “treat yourself gifts.” I went through a phase where I thought I deserved a box of cookies every time I walked home from BART, the train in San Francisco. This happened every day, so my “treat” was more of a bad habit. I eliminated it and it was a way to save money in a place where I didn’t actually value the thing I was purchasing.
Be honest too! If you want to spend more money on something, that’s completely fine. It’s by evaluating our values and seeing where we want to spend vs save money that makes personal finance feel rewarding instead of a chore.
Is there a place in your life that you’ve noticed Lifestyle Creep? Let us know below!
Show Notes:
If your spending is eating your savings, you might be experiencing 'lifestyle creep'
By Ruth Tam, Michelle Aslam and Paco de Leon, Life Kit on NPR
Start Finishing by Charlie Gilkey
Community Time:
Irena recommended our episode The Art of Planning the Sabbatical in The Boonly Newsletter - thank you so much for sharing our podcast with your readers!
Carla let us know she loved the episode 130. Redefine Success to Recreate Your Life and shared it with a friend!
Abby listened to 126. The Five People Your Surround Yourself With | Uplevel Your Life By Upleveling Your Relationships and 129. How To Do More By Doing Less and did a couple exercises to see if her values were aligned with how she’s spending her time. Shout out to Abby for always taking action on each episode and sending us photos of the exercises she does.
Michael commented on episode 126 and let us know he was curious about the wedge pillow we mentioned. You can find that pillow here: https://a.co/d/aTnm7O8
Let us know what you think about this episode and it’s very likely we’ll give you a shout out on our next episode! We love to hear your thoughts on the topics we discuss.