We are back again talking about the final part of lifestyle inflation! One of the key parts of managing lifestyle inflation is knowing how to deflate areas of life that have become a little (or a lot!) overinflated. Today we are going to look at what lifestyle deflation is and how to reset your spending.
In the last post, we learned to identify if areas of your lifestyle had inflated, and how to ensure any inflation was in-line with your values. We are going to build off of that information and identify if any areas are prime targets for lifestyle deflation. If you have not yet identified your areas of inflated spending, you can walk through that process here.
The challenge of cutting back
Before we dive into the nitty-gritty, I want to acknowledge the difficulty that you may face. Our innate nature as humans is to spend more money as a way to gain safety, status, or both. Reducing our spending goes against that nature, so be prepared for a bit of resistance from your inner nature!
Once you realize and acknowledge these internal fears, you can easily move past your internal roadblocks and start implementing changes to your spending!
Why should I care about Lifestyle Deflation?
Spending money in proportion to your identified values and budget allows you to feel confident about your spending. There will be minimal regretful overspending, and increased focus on meeting financial goals that are important to you.
Spending intentionally allows you the freedom to do more in life. Because you are not spending money on expenses without value, you will have an abundance of money to spend lavishly on areas that are important to you. This will lead to increased lifestyle contentment and satisfaction!
How to Deflate your Lifestyle?
Evaluate the areas of spending that align with your highest values
Based on the values work we did in the last post, make a list of your top values and compare those to the list of your current spending. Identify each spending category based on the following priorities:
- Highest priority- don’t cut and look for other cuts to fund more of this type of spending
- High priority- don’t cut, but be intentional about increased spending in this area
- Medium priority- make moderate cuts, but do not increase spending in this area
- Low priority- look for ways to cut to the bare bones or eliminate your spending in this area and monitor in the future for increases
- Eliminate- this spending is of no importance to you, eliminate if you can or find the absolute cheapest option if you cant eliminate
Start cutting
Now that you have identified the priority of all of your spending areas, now is the time to make a plan! Any area that is identified as an “eliminate” or “low priority” is an area that you want to start with. Make a plan on how you will cut these expenses. You may use many different techniques on reducing these expenses depending on the type of expenses you have:
- Recurring bills- cancel the service or reduce the service (like internet, cell phone, cable type bills). Look at changing service providers if it results in significant savings.
- Monthly variable spending- start a budgeting or tracking system to specifically track how much you are spending in real time on this budget area (like groceries, eating out, home-based spending at Target or similar store)
- Implement a “treat” plan, where you only allow yourself to go to or buy something at a certain interval. This works well for spending areas like eating out, or buying coffee. Make a rule that you will bring coffee from home Monday through Thursday each week, but you can treat yo self every Friday (get coffee and a pastry and enjoy the heck out of it!).
Start with the easy, low-hanging fruit and get those trimmed back down to the appropriate size before moving on to any medium priority or more complex cuts.
Get help!
There are a ton of finance blogs and social media influencers who have made their name as being the most frugal people out there. You don’t need to tackle this task of cutting expenses yourself.
Use some of those resources to help you find out easy ways to make these cuts. Some of my favorite tips and websites are:
- Frugalwoods- Using an MNVO cell phone plan to save a ton on your cell phone service.
- Get Rich Slowly- How to reduce your travel and vacation costs while still enjoying your trip.
- Donna Freedman- Living poor and loving it because she is still spending on areas she values.
- Get Rich Slowly- The intentional way JD approaches how to buy a new car based on his values and needs.
- Mr. Money Mustache- How frugality and fanciness can go hand in hand.
There are a ton of resources available and these are some of the best bloggers who talk about cutting costs in order to afford the lifestyle they want. Many of these bloggers started out more frugal, and have stepped back on the frugal talk, so I would dig into the archives and look at the spending wisely type categories to get started.
If there is an area of your spending that you are unsure how to cut, there are a ton of resources out there. Take a moment and do a google search for that spending area and “reduce spending” or “cut costs” and you will find a wealth of information! Note, be skeptical of what you find on the internet, there is no magic way to cut spending and you shouldn’t ever have to pay to reduce your spending in areas!
Adjust your spending
Over a period of the next few months, intentionally work on adjusting your spending to align with the priorities you identified above. Check in on your spending frequently (weekly or every 2 weeks is ideal at this time), and make tweaks to your spending habits and behaviors in response to the spending information.
Get brutal!
As you start to cut more and more unvalued spending, your monthly cash flow will see huge increases. This is where it starts to get fun because you can save, spend, or invest this cash in the areas of life that really matter to you! Be intentional and ruthless in this step and keep cutting until your spending and saving align with your values!
Once you get to that balance point, you can take a step back from this lifestyle deflation project and give your brutal cutting a breather! At that point, you can switch from tracking spending frequently and giving much of your attention over to your spending. Now you can settle into a maintenance mode where you are just making occasional checks of your spending to ensure that it is staying at an appropriate level for each spending category.
Monitoring for lifestyle inflation is an ongoing process, but it gets easier the more you have done it. I promise!
I find that most of my lifestyle inflation happens when I am distracted by another big area of my life. If you have a really busy period over several months, with career changes, family issues, or health problems, once that period ends then do an intentional sweep of your finances looking for lifestyle inflation. When you are so busy, convenience buying tends to increase and your focus is not on the lowest cost option (rightfully so, since other things are important at certain points in life!). Don’t beat yourself up if areas of your spending creep up. It is part of life, and you now have the skills to go back through and deflate those areas.
How are you going to approach your lifestyle deflation? Have you ever made intentional cuts to your spending based on values before? If so, I would love to hear the tips that helped you be successful in the comments below or over on Instagram!
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