Lifestyle inflation. A term that many personal finance experts love to throw around in a “shame” based way to get people to spend less money. Lifestyle inflation doesn’t have to be a negative or shame-based term. Today we are going to look at what is lifestyle inflation and how to identify if your lifestyle has inflated.
This is actually going to be an entire mini-series for the next few weeks! We are going to look at all areas of lifestyle inflation, and how to manage or even deflate your lifestyle if you need to. And we are going to do all of this without any shame, blame, or judgment!
Your life and the choices you make are incredibly personal. Just because someone makes a choice you don’t understand or is not meaningful to you, doesn’t mean they are making a bad choice. Throughout this entire lifestyle inflation series (and through all of the posts on Kaybee Lives) we are going to approach evaluating your spending based on your personal values and life priorities. So, this is a giant example of you do you!
What is Lifestyle Inflation?
The base definition of lifestyle inflation is “an increase in spending and consumption within a person’s lifestyle”. This is also referred to as “lifestyle creep” where your lifestyle slowly creeps up to a higher level.
Lifestyle inflation can happen across all areas of your lifestyle or can be narrowly focused on certain areas of your lifestyle. Lifestyle inflation tends to happen slowly over an extended period of time. Most people don’t just “decide” to go out and spend 20% more today than they did yesterday.
To help explain what happens with lifestyle inflation, let’s look at a few examples of real-life people.
Eating out
One of the sneakiest types of lifestyle inflation is eating out or getting takeout/delivery. You start out getting takeout once a week for lunch out with co-workers, and then it slowly increases to a few lunches out and a few takeout dinners grabbed on the way home.
The increased premium cost for the convenience of take-out or delivery can add up quickly and have an impactful effect on your monthly spending.
Tv subscriptions
TV, streaming, music, or other entertainment subscriptions are a common area of lifestyle inflation. You start out with one or two, then every few months add another one without canceling the ones you already have. Some free trials don’t get canceled in time, and turn into another subscription too. These are easy to dismiss because most of these subscriptions are only $7-$15 a month. But by the time you add them all up, it can easily turn into $75-$100 a month with having 5-10 of these subscriptions.
One intentional upgrade
Often, I see a cause and effect situation where making one intentional life upgrade, then leads to several other unintentional upgrades.
I experienced this when I bought a new bed. My old one had been mine for years (probably more like decades!) and was definitely feeling its age. I bought a new mattress and headboard. Pretty soon I decided that I also wanted new bedding, and then I somehow ended up with 2 new nightstands, several decor pieces, and a second new comforter.
So, be mindful when you do make a large upgrade to your living space or life, and be extra aware of the little lifestyle inflations grifters that might tag along for the ride!
Turning a treat into a regular routine
I love getting a massage! An entire hour of pampering, no distractions, and you walk out feeling amazing! Many people start out with a once-a-year treat-type massage for their birthday or another special occasion. They love it so much, that slowly that treat increases in frequency to be twice a year, every 3 months, every other month, and suddenly they are getting a massage once a month.
Public transportation
Public transportation is a cheap option to get you to different areas across town, but it can be time-consuming, difficult, and require extra effort than driving. A common practice I see when people move it cities that use public transportation to get around, is they slowly start adding in a taxi or ride-sharing app trip, and then slowly increase the frequency of those more expensive car trips.
An easy way to see the effect of this is to look at commuting costs. Maybe it costs you $3 on the subway to get to work, with a 2-block walk, totaling 30 minutes of time. But a rideshare can get you to work in 15 minutes, but costs $25 for the peak time. If you find yourself slowly increasing your rideshare rides from once a month, to every day your commuting costs have increased about 800%.
Can you resonate with any of those lifestyle inflation experiences in your life?
Lifestyle inflation is not bad!
Lifestyle inflation is not a bad thing. Take a moment and let that sink in.
The key is to intentionally change your lifestyle and to get increased satisfaction and value from the increased spending (check out my post next week all about intentional lifestyle inflation!)
If you can afford it, and get great value from this increased spending, then spend guilt-free! Don’t listen to the naysayers or haters. You do you!
How do you know if your lifestyle has inflated?
Understanding lifestyle inflation is one thing, but connecting it with your life is a whole other focus. There are a few ways you can look at your spending and identify possible lifestyle inflation.
Compare spending in the same month for 2 or more years
Look at your spending in all budget categories for the most recent month you have, and then that same month 1 year ago, 2 years ago, and even more if you have the data available.
This is easiest if you are tracking your spending with budgeting software or an app. If you don’t have that information available, start with looking at the different spending categories in your credit card statement and compare those statements year over year. You are looking for totals spent in various budgeting categories like
- Eating out
- Coffee
- Groceries
- Utilities
- Gas
- Transportation
- Entertainment or fun
- Subscriptions
Compare your spending this month to last month
If you feel like you have a sudden lifestyle inflation bump (especially as things return the “normal” after Covid), then comparing your spending in the most recent couple of months may be the most helpful way for you to identify this.
Use a “rule of thumb”
If you don’t have past information to compare your spending to, there are several “rules of thumb” for spending that finance professionals have shared to give people rough ideas of how much they should be spending in their budget. Looking at something like the 50-30-20 budget can be helpful to see if you are able to fit your budget into the parameters set.
Ok, how do you feel about lifestyle inflation now? Hopefully, you understand it a little better, and are not blaming, shaming, or judging yourself or others in their spending choices!
How have you seen lifestyle inflation impact your life? I would love to hear about it in the comments below or over on our Instagram page. Keep your eyes peeled for next week’s post where we talk all about managing lifestyle inflation intentionally.
Pin Me!
Leave a Reply