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In the previous material, I touched on the issue of managing the household budget with irregular income. Today I will finish this thread. I don't want you to equate saving with sacrifice, because that's not the point at all, although unfortunately most people think so wrongly. I want you to be able to react to this situation and understand why it needs to be done.
What is Lifestyle Inflation?
Ordinary inflation is the one you hear about in the media. In short, it is an increase in the prices of goods and services. In Poland, inflation is calculated by the Central Statistical Office (Central Statistical Office), periodically changing the composition and weight of the inflation basket. We will not deal with it today, although both phenomena are very similar to each other.
Lifestyle inflation is 100% about you. This is the phenomenon of increasing spending as income increases. If you earn more and have more money at your disposal, then you want to please yourself. And there's nothing wrong with that, as long as you can set a safe boundary for yourself.
If until now you have watched each zloty ten times before it was issued, then after receiving the increase you feel that it is high time to loosen your belt. After all, this is extra cash, and a small prize has not hurt anyone yet. The problem is that it doesn't end with a small reward. Often a new amount of earnings is used for resistance. With a 500 PLN increase, you do not get a 100 or 200 PLN reward when saving the rest. It seems everything.
How to Overcome Lifestyle Inflation?
When lifestyle inflation hits you, you stop looking at prices. You no longer have to be a skner, you can finally live better, albeit a little... And rightly so! You should even raise the comfort of your life to feel better. Yes! Do it! Go ahead! But — keep moderation and increase convenience correspondingly more slowly than you raise wages.
You don't have to spend the entire raise right away. If you have managed so far, for example, for PLN 5,000 per month, you can handle it for PLN 5,200. It's not like if you don't spend your entire paycheck after the raise ($5,500), you'll suddenly go hungry. You've already done it for less. In theory, it should even be easier for you to save. In practice, it varies, regardless of the amount.
It is easy to surround yourself with new luxuries and get used to their constant presence. It's easy to live lighter and lighter. It is much more difficult to go back down and get rid of what until recently was superfluous, and today is normal. Never be too sure of what you have now. A lot of people thought they had a confident and high-paying job, and then someone ate the bat and half the economy in the world came to a standstill.
Saving is not sucking the joy out of life and putting it into a deposit. It is to think soberly about your own possibilities and eliminate what is superfluous. Thinking about whether the expenses incurred are actually needed or if they simply are and you have to pay for them. Or maybe you don't have to at all?
Why do we succumb to it
People as individuals desire development, in every sphere. We want to rise higher, not lower our level. It is clear that you want to be better in life. Have you ever thought to yourself “oh, I make a lot of money, it's time to get a little poorer”? Of course not. Sooner you will think about a raise and renovate the kitchen to a more modern one, because you have seen amazing photos on the Internet.
Even without getting rich, you want to stay at the current level, not lower. We value comfort, we raise the standard of living and it is natural for us to pay an increasingly higher price for it. We explain it to ourselves by needs, although in essence they are... desires.
Better apartment decor? We go with the times! In fact, we adjust the apartment to a higher standard to fit the new housing estate, the neighbors or at least the aspirations. Not necessarily because we feel bad about the old, or at least not always. It depends on the comparative scale.
Moreover, it is very easy and quick to get used to it. I repeat, there is nothing wrong with rewarding yourself for your performance, but regular spending on whims at some point ceases to be a reward and becomes an everyday thing that you will get used to.
It can happen to anyone
Lifestyle inflation can affect anyone who gets a sudden injection of cash and has no idea what to do about it. Spending in the style of “now I can do anything” begins, combined with the unfounded belief that this will always be the case.
No, it won't. It goes like in Hollywood movies with cheap morals. First, we observe a hero who has a terribly hard life, but with unshakable willpower and tremendous effort he achieves success. However, it only takes a moment for him to lose it all and fall to the bottom, where he finds what he has lost along the way: true values, such as friendship, family, etc. Then he realizes that he has always had in his life what gave him true happiness. He hugs his wife at sunset, some building background music is heard in the background and finished... Give me that Oscar!
Except that such stories neither consist of it nor do they have such a course. Mostly they end in family breakdown, bankruptcy and gigantic debts. This course affects everyone, from residential Sebiks, to mid-level businessmen, to world stars of the largest format.
- Diego Maradona
- Mike Tyson
- Elton John
- 50 Cent
- Burt Reynolds
- Nicolas Cage
- Johnny Depp
- Wesley Snipes
Do these names tell you anything? I think so. Each of these people (and there are many more) either officially declared bankruptcy or was on the verge of bankruptcy. Only a few of them got out of the trouble they brought on themselves.
Since poor wealth management and living in the moment can be in trouble earning even millions a month, do you really think that on a smaller scale this will not happen?
How to Overcome Lifestyle Inflation?
When lifestyle inflation hits you, you stop looking at prices. You no longer have to be a skner, you can finally live better, albeit a little... And rightly so! You should even raise the comfort of your life to feel better. Yes! Do it! Go ahead! But — keep moderation and increase convenience correspondingly more slowly than you raise wages.
You don't have to spend the entire raise right away. If you have managed so far, for example, for PLN 5,000 per month, you can handle it for PLN 5,200. It's not like if you don't spend your entire paycheck after the raise ($5,500), you'll suddenly go hungry. You've already done it for less. In theory, it should even be easier for you to save. In practice, it varies, regardless of the amount.
It is easy to surround yourself with new luxuries and get used to their constant presence. It's easy to live lighter and lighter. It is much more difficult to go back down and get rid of what until recently was superfluous, and today is normal. Never be too sure of what you have now. A lot of people thought they had a confident and high-paying job, and then someone ate the bat and half the economy in the world came to a standstill.
Saving is not sucking the joy out of life and putting it into a deposit. It is to think soberly about your own possibilities and eliminate what is superfluous. Thinking about whether the expenses incurred are actually needed or if they simply are and you have to pay for them. Or maybe you don't have to at all?
Why do we succumb to it
People as individuals desire development, in every sphere. We want to rise higher, not lower our level. It is clear that you want to be better in life. Have you ever thought to yourself “oh, I make a lot of money, it's time to get a little poorer”? Of course not. Sooner you will think about a raise and renovate the kitchen to a more modern one, because you have seen amazing photos on the Internet.
Even without getting rich, you want to stay at the current level, not lower. We value comfort, we raise the standard of living and it is natural for us to pay an increasingly higher price for it. We explain it to ourselves by needs, although in essence they are... desires.
Better apartment decor? We go with the times! In fact, we adjust the apartment to a higher standard to fit the new housing estate, the neighbors or at least the aspirations. Not necessarily because we feel bad about the old, or at least not always. It depends on the comparative scale.
