Turn Lifestyle Inflation into Savings Inflation

One term that has been getting a lot of exposure in the past few years is “first world problem”.  This refers to problems that only people of privilege have, such as your fries not being salty enough or not having a phone charger that’s long enough to allow you to browse your phone while in bed.  This is opposed to third world problems, such as not having clean water to drink, which unfortunately a frighteningly high amount of the world’s population suffers from.  While “first world problems” are made in jest, there is a real first world problem that afflicts many in America.  And that is lifestyle inflation.

Seeing your co-worker or neighbor with that new car (which costs them $400/month) or a new sweet Macbook (even though they bought a perfectly good one last year) can bring about many feelings.  Some feel jealousy, thinking that we deserve that as much as they do.  Some get angry, thinking that my neighbor has no right to have that since I work so much harder than him.  These negative feelings can usually lead to negative actions, such as buying the same things for ourselves when we don’t need them and/or can’t afford them.  Doing this once or twice may not destroy your finances (but it may get close).  The big problem starts once we make this lifestyle inflation a habit.  This can put a major hurting on your finances, leaving you deep in debt with little to no savings.

This is a big problem in this country and can really destroy your finances and your happiness.  Few people will ever say, “Gee I’m so glad I got that iPhone 5 20 years ago.  It really fulfilled me”  Stuff is just that.  Stuff.  We enjoy it for a while, it gets used, and we move on to the next thing.  However, once we realize how dangerous lifestyle inflation can be, we can turn it right on its head.  And it’s actually very simple to do.

First, make a list of all of your expenses and get rid of or minimize the stuff that’s not important to you.  If you feel everything is important to you, just pick your top 5 things and get rid of the rest.  It can be surprising how many monthly bills we have for things we rarely use.  If you found a way to shave off $200 from your monthly payments, you’re in a WAY better situation than before as this will be savings that last you a LIFETIME.  Use that savings towards various actions that will help your finances, such as paying off credit card debt or starting an emergency fund in an online savings account.

Now once you get a make some more money in the form of a raise, bonus or side income, put that towards your savings goals.  You already learned to live without that money, so you won’t really be missing it.  It’s okay to use new money to celebrate once in a while, but the majority of it should go towards helping your finances, not hurting them.  For example, I have a boatload of student loans.  When I pay one off, I just use the minimum payment I had on that loan and apply it to my next loan.  I already lived without that money before and I can do it again.  This will get me debt free even quicker.

Continue this pattern for years and years, and not only will you be much better off financially, you will most likely be happier as well.  Who knows, you might even be able to retire early and do whatever you want, while others continue working for things that ultimately don’t fulfill them.



  1. Great thinking – flip lifestyle inflation on its head! I’m saving today to maximize my freedom to choose my lifestyle in the long-term without negatively impacting my future!

    We currently put about 2-5% of any bonuses etc towards our holidays, and the rest goes straight into the savings fund!

    • Syed says

      Great point Graham. It all comes down to freedom in the end. Do you want the freedom to do and spend as you wish? Or do you want society to dictate that to you. Thanks for the comment!

  2. Great post. My trouble isn’t so much stuff as experiences- be it a nice dinner with friends or a vacation. I tend to inflate that way, and it’s hard for me to say “I won’t value that trip in 20 years”, because chances are, I will.

    • Syed says

      Thanks for the comment Stefanie. Experiences definitely are more valuable than things and will last a lot longer (unless you get hit with one of those Men in Black lasers). But I think making that last student loan payment would be the best experience for me at the moment!

  3. Excellent post… The best part is, once you get into that habit of saving money, and seeing your account balances go up, it is very addicting!! Which in turn makes it easier to save more money when you get a raise (rather than a lifestyle inflation), which in turn keeps the cycle going!

    • Syed says

      Very true! It’s always nice to turn saving into a game while always keeping the big picture in mind. Thanks for the comment Jon.

  4. This is a great post! A key difference between those who live within their means and those that are always struggling to “make ends meet” is the ability to resist lifestyle inflation. You will never get ahead if you keep spending any increase in salary on “stuff”.

    • Syed says

      Very true Kay. Very true. Stuff gets you nowhere in the end and loses its luster quickly. Just look at how dinky the old iphone models work compared to the latest model. Yet at the time when the were released, they were the greatest things ever.


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