9 Signs You're Suffering From Lifestyle Inflation


Our tendency is, for the most part, to live right up to the ceiling of what our income will allow. This lifestyle inflation becomes a problem when our expenditures begin to exceed the amount of money we bring in, thereby causing us problems managing our personal finances.

What's worse — many people who are engaging in lifestyle inflation don't even realize it, because they've spent so much time getting accustomed to living that way. (See also: How to Not Be a Debt Slave)

So how can you recognize and identify this potentially disastrous habit? Here are nine practical signs to look out for.

1. Excessive Credit Card Debt

Though it's a common practice for many of us to use our credit card and pay it off on time (there's value in reaping those rewards points if you're a disciplined user), excessive credit card debt that you can't pay off will begin to accrue interest. Over time it'll cost you far more than the initial bill in interest and late charges. When a rolling credit card payment becomes a normal part of your budget, it's a sure sign that you need to scale back and spend less in order to pay off your debt. Start setting aside chunks of cash specifically allotted to chip away at this debt as quickly as possible.

2. Avoiding Basic Money Management Tasks

There is, of course, common procrastination when it comes to doing your budget or checking account balances. I'm not talking about that. Instead, I'm referring to the act of intentionally avoiding any tasks related to managing your own money. Generally this happens when you know that the picture you see is going to be bleak, and it's much easier to just avoid it instead and hope for the best. Get back on track by scheduling a certain time of week or month — I find that Sunday afternoons work best for me — to check in on your finances and determine what you need to reel in for the week ahead.

3. A Lack of Discretionary Income

"Mo' money, mo problems" as they say, and this one is typical of those who suddenly start earning more than they were previously, followed closely by spending more. It's also a telltale sign that the budget needs to be tightened up to provide some breathing room and more mileage out of your paycheck.

4. Your Income Is Spent Before It's Earned

Another term for this is "living paycheck to paycheck." In this scenario, your expenses are so crippling that you have to wait for your paycheck to show up before you actually pay for them. Once that happens, it's a revolving door where you're always behind and constantly trying to play catch up. The obvious solution here is to cut back where you can, but also to take a serious look at your cash in and cash out and decide whether serious changes need to be made — like downsizing to a smaller apartment, buying a less expensive car, etc.

5. People With Similar Incomes Don't Spend as Much as You

There are a lot of extenuating circumstances that can cause two people in the same economic tier to live lives that look really different — like if one is single and the other is a parent of two. Outside of those circumstances, however, you should generally see similarities between your lifestyle and that of your peers who make what you make. If there's a disconnect, it might indicate that you're living beyond your means.

If you and your colleagues earn about the same salaries and one of you is taking lavish vacations and indulging in other expenses that don't seem feasible across the board, there's likely a problem — and if it's your problem, it's time to settle down.

6. Impulse Buying and the "Shopping Rush"

Everybody loves to get new stuff. The allure and mystique of new things (regardless of our age) is always strong, even if it wears off after a short time. But if you feel yourself craving that feeling and the rush that comes along with making a new purchase, it's an indication that shopping has become a habit that has become detrimental to your finances — and perhaps other areas of your life. Usually this is an issue that can be quelled by self-discipline, but if you feel it's out of your control you can seek professional help.

7. You're Bored at Home

Increased buying can be a vicious cycle, leading to boredom, which leads to even more dangerous spending habits. Do you find yourself restless at home? Do you often go online or out to a shopping center to buy something that you don't need just to have something to do? I'm guilty of this myself at times, which is why I try to plan activities and adventures with friends for times when I know that I'll otherwise be at home without much else productive on my plate. Staying busy curbs my desire to blindly shop for things I don't need, and I get to fill my weekends doing things that feel like I spent money even if I didn't.

8. You Don't Look for Deals

Sometimes an inflated lifestyle is just a matter of failing to be thrifty (or, in my opinion, just being plain lazy). I know plenty of people who are spending way more money than they need to spend simply because they pay full price for everything when there are savings literally at their fingertips. I can guarantee you that I save thousands and thousands of dollars every year because I won't purchase a single thing without a coupon or a discount (if I can help it).

9. You Don't Feel the Need to Save Money

Perhaps the most telling sign that you're overspending and living above your means is that you've completely written off the idea of saving money. You assume that it's unnecessary or perhaps impossible to do. The truth is, neither of those things are accurate.

If you make even a modest amount of money, you can contribute something to your savings account. This is a good place to start if you've come to the realization that you're living an inflated lifestyle. Once you cut back expenses, set up an automatic bank draft from checking into savings and start with a small, weekly amount. Even just $20 is a great start. Rome wasn't built in a day, and neither is your bright financial future.

Do you have other signs of lifestyle inflation that you'd like to add? Please share in the comments below.

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