Lifestyle creep has a way of slowly seeping into your finances. Maybe after all of your hard work and dedication, you finally get that raise you’ve been hoping for. Or one evening a friend invites you to dinner at a new upscale restaurant. You may reason that you have extra money to burn or that you don’t want your friend to think you’re being cheap, so you shell out the cash and proceed with spending behaviors that you’ll feel bad about later. If you want to build wealth, you’ll need to stop these behaviors immediately. Over time, lifestyle inflation can completely ruin your finances or prevent you from reaching financial goals like paying off high-interest debt or affording the retirement you want. Here are a few ways to break free of lifestyle inflation.
1. Stop comparing yourself
If you want to avoid financial disaster, you’ll have to stop the comparison game. Just because your friends or neighbors seem to be doing well doesn’t necessarily mean that they really are. They could be living a borrowed lifestyle, courtesy of credit cards and personal loans. Don’t buy into the lie. Unless you want to be broke, start focusing on your own life and making financial choices that are best for you.
2. Save your raises
Don’t think of your raises as extra money. Think of a raise as a means to reach your savings goals quicker and a way to strengthen your financial independence. Resist the urge to spend raises or an occasional windfall. Remember that it’s not a matter of if but when a financial emergency will occur. Don’t get so comfortable that you forget to prepare for the future. Lack of preparation will come back to bite you when you least expect it.
3. Be careful who you spend your time with
How can you expect to be financially healthy if you spend the majority of your time with people who are terrible with money? Make sure to limit your time with those who are financially irresponsible or always facing a financial crisis. You’ll either be tempted to spend recklessly or you’ll become someone’s personal ATM. So take time to evaluate your friends (you even have to be careful about some family members, too).
4. Stop treating credit cards like a piggy bank
We can’t say this enough: Stop treating your credit cards like a piggy bank. Don’t forget that all of those purchases must be repaid with interest. You may reason you can just continue to charge and pay the balance back whenever you get to it, but we all know this won’t happen. Do your best to pay off your balance as soon as possible. It’s just too easy to get to a point where your credit card debt becomes unwieldy.