If I handed you an extra $500 every month for the next year, what would you do with the money? Taking the extra $500 each month and paying off some debt, creating an emergency fund or investing it says a lot about your financial mindset.
By exact definition, lifestyle inflation is increasing one's spending due to the increase in their income.
Lifestyle inflation is one of a few reasons why roughly 80% of Americans live paycheck to paycheck. And even the biggest of earners, those in the top 10%, can and do fall victim to lifestyle inflation!
Recognizing the fact that just because you earn more, doesn't mean you get to spend more. Start setting priorities for your raises that revolve around financial goals and not stuff.
My personal favorite is Personal Capital, which lets me watch our net worth grow while keeping track of our finances. This helps us stay motivated and avoid lifestyle inflation.
Most of your time will be spent catching up and reflecting on past memories and experiences. In order to help curb lifestyle inflation, place memories and experiences first.