Lifestyle inflation

Lifestyle inflation

Inflation has been rising, and we all feel it in one way or another. At least for the short term, some believe things are levelling, but the future is unknown.  

Recently I read an article that spoke about becoming a “High earner, not rich yet a person.”

Now you may or may not be a higher earner, but there are some great thoughts for all. You can read the article by Katherine Mclaughlin here. Let me share my thoughts.

Enticed to Spend

One challenge for us all is the enticement to spend as more money comes in.

 The temptation to spend more money is something we all face. The author calls it Lifestyle creep or lifestyle inflation. “The idea is spending when an individual’s income goes up.”

The author challenges the reader to be aware of lifestyle inflation; it can leave us struggling with debt and saving for retirement.

As the author points out, it is not just high earners that can fall into this lifestyle inflation. It happens slowly, a cup of coffee here, a meal there, a toy here, a credit card swap here or there.

The author Katherine challenges us to plan for our raises or increases income.

In my life, one season, we made a choice to continue to live at a lower rate of income even though we had increased revenue. This allowed us to pay down debt and be debt-free. We have lived on one income for all of my married life; from time to time, my wife got odd short-term jobs here and there that helped. However, we lived off one income. It has been tight at times but allowed us to stay debt-free and her to be home with the kids. That extra money helped with additional bills or vacations or a fun night out.

For those with a two-income family, what if you just lived off one income? What could you do with an extra 20 to 50 K a year?

We will all spend money if there is no plan for it?

There are some other great thoughts in the article, such as

  • Create habits while you are young
  • Pay yourself first
  • Correcting lifestyle creep

If we do not have a plan for the money, we will spend it, and it will master us.

Are you looking for help to create a plan?

Are you not sure what your options are?

Looking for was to correct the lifestyle creep softly?

Let’s take an assessment of where you are at and where you want to go?

How much life insurance do I need?

How much life insurance do I need?

How much life insurance do I need?

A simple way to start to figure out how much life insurance you need is a Dime calculator.

Debt and final expenses – Add up your debts outside of your mortgage and estimate your funeral expenses.

Income – Take what you earn and multiply it by the number of years you need to support your family.  For example, if you are 40 and you have 20 years of working left.  

Mortgage – What is the amount you need to still pay off on your mortgage. 

Education – Do you plan on helping your kids to college, what will that cost?  How much do you want to help with?

I would recommend that instead of just planning for life insurance, consider an overall financial plan.  

There are other things to consider, as well regarding retirement and current and future investments.

Getting an understanding of this was important as I looked to provide for my family. 

A great place to start is getting your budget in order.

Try this free budget tool to help track and plan your budget.