How to Avoid Lifestyle Inflation

Ideally, more money should mean a better financial position but it doesn’t always work that way.
The web is splashed with news of celebrities that were once rich. They earned a lot of money from their careers but all of it got frittered away through lifestyle choices.

So how can you avoid this trap:

Have a clear distinction between your wants and needs.
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Make savings a priority i.e. a first line on any income before you make other purchases.
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Avoid buying things on credit just because you can make the monthly payments.
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Have a spending plan to deal with every income, bonus or pay raise.
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Make an allowance for some (only some) splurge money.
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Make reasonable adjustment to your budget as your family grows and add reasonable comfort to your lifestyle.
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At the end of the day, it is perfectly normal to want a more comfortable life and most of us will often tend in that direction. I’d think only a few strong willed people will be able to resist the urge for a new suit… (sometimes you need to dress the part, to be allowed into a circle that is key for the next level)

What’s important is to balance your spending with your income today and your financial goals.

Don’t try to keep up with the Joneses, they are probably broke. Don’t try to keep up with the #kardashians you aren’t in the same tax bracket.

One Reply to “How to Avoid Lifestyle Inflation”

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