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Frugal Find: Dealing with Lifestyle Inflation

   Posted On: April 11, 2014  |    Posted In: Saving  |     Posted by: Broke Millennialยฎ

Earlier this week I pulled a stereotypical millennial move — I started a new job. Apparently, the average 25-year-old (which I’ll be in a month) has worked 6.3 jobs between the ages of 18-25.

Well, let’s count ’em up:

  1. Resident Assistant in college
  2. Koop Lab assistant (that was the broadcast editing lab on my campus)
  3. The Late Show with David Letterman, page
  4. (During the same time period as Late Show) Starbucks barista
  5. Babysitter extraordinaire (still working this gig)
  6. Account coordinator at a PR agency
  7. Freelance writer
  8. Mystery new job!

Oh, look at that. Eight jobs! I just always have to be slightly better than average.

In my new position (don’t worry, I’m writing a full-length post on it soon), I have gotten a bit of a pay bump. Anyone who works in the communications field knows that it isn’t a well-paying industry.

Several months ago, I wrote an article for DailyFinance about Lifestyle inflation (don’t bother reading the comments). Because I wasn’t experiencing it myself, I remember thinking how easy it is to handle lifestyle inflation. Just keep living the way you’re used to living and bank all that sweet, sweet extra cash.

HA!

Suddenly, I’m empathizing with people who fall into the trap. I’m eying gym memberships and thinking, “I could swing that.” Suddenly, I’m a little more likely to eat lunch out instead of sticking by my long-standing tradition of brown-bagging it. Hell, I even briefly considered getting cable again! (What can I say, I was at my parents house and it was nice being able to catch up on ‘The Real Housewives‘).

Don’t be confused. I’m not suddenly rolling in it. It’s just a bit more than I’m used to make. This coupled with the slightly Trappist monk lifestyle I’ve been living, and the freelance money, means I’ve set myself up so that I’m comfortable with spending a little. I’m not plotting a drastic lifestyle inflation or anything, but it’s nice to feel free to go to the movies AND out to dinner without wringing my hands. Or enjoy some of the finer (as in not on my list of cheap stuff to do) things New York City has to offer.

How am I handling it, you ask?

Naturally, I have set up a 401(k) at work. I plan to automate a portion of my paycheck into savings into to curb too much temptation to splurge. Usually I just transfer it myself. I’ll also continue to save all the freelance income I earn in order to reach my emergency fund goal. Finally, I want to do some more investing — but I’m not sure exactly what yet.

It’s natural to experience some level of lifestyle inflation

I’m certainly not eager to ever go back to my days of sustaining primarily on “expired” Starbucks leftovers I got to take home after I closed up. There is no shame in increasing your comfort level, just a bit. But in order to stay frugal and financially fit, I’m taking the steps right now to ensure that this pay increase means more investing power, higher contributions to savings and a fun splurge just here-and-there.

Show me the money
It ain’t just monopoly money anymore! Okay, that’s a lie. Still mostly monopoly money.

How have you handled lifestyle inflation?

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Gifs taken from GIPHY: Makin’ it rain & Gasp

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37 responses to “Frugal Find: Dealing with Lifestyle Inflation

  1. That first meme is epic!!! I’m not sure I have dealt with lifestyle inflation that great. At the same time, I haven’t had much choice where my money goes. It’s going towards our student loans, mortgage, gas, and other things that are pretty fixed month-over-month. When my wife finishes her masters (or phd if things go as planned) and we have our student loans paid off I could definitely see us being at HUGE risk of lifestyle inflation.

    1. It will probably feel great to pay off all your debt and suddenly have all that extra money. Certainly a huge risk for lifestyle inflation. Or just to put a ton into investments and savings.

  2. We have worked very hard to live below our means, save and invest in the last ten years. That discipline has now created a lot of choices, where we can expand our lifestyle a bit. But it’s all because of wise choices made over many years.

    1. That’s what I’m hoping for in my future. I do have fun right now, but I certainly don’t spend on par with some of my peers. I hope in the future it will mean I have far more freedom.

  3. Our income has significantly increased over the past year, but luckily I don’t think we have had much lifestyle inflation. I am still a pretty cheap person and I think that helps me with not wanting to spend a ton of money on things that I don’t really need ๐Ÿ™‚

    1. Well, when anyone hustles as hard as you do they’re bound to have some great income increases. I’ve loved following along with your wedding budget/bartering because it shows how you do really value your money.

  4. Congrats on the new gig Erin! Can’t wait to read how it all came about.

    Do you feel the labor market is tightening up around your parts?

    It seems really tight in SF, but the recent tech/Internet downturn is starting to make people wonder.

    Sam

    1. I really haven’t, but maybe it’s because of my industry(ies)? I’m also still pretty young in my career which I believe means far more opportunities because it’s easier to switch gears without taking big steps back.

  5. Congratulations on the new gig – cannot wait to hear about it!
    #1 – proud to say that I took that monopoly picture circa 2006-2007 ๐Ÿ™‚
    #2 – proud of the Trappist monk reference #CatholicProblems

  6. Congrats on the new job…can’t wait to hear about it! And thanks for the mention! As for dealing with lifestyle inflation, it’s okay to have a little bit of that like you said. I try to increase my contribution to my 401k so I don’t really see too much of the increase in my paycheck. That way I’m not tempted to spend more thinking I have more money to spend.

    1. Increasing my 401(k) contribution was a first move too!

      The mention was well-deserved. I appreciated you bringing a slightly controversial, but important social issue, into the discussion forum.

  7. I’m excited to hear about the new gig! Yay for pay increases and new experiences. I definitely had a bit of lifestyle inflation with my job, but not much. I also countered that by putting more towards debt.

    1. Thanks, Melanie. Putting that little bit extra towards debt is a good move. You’ll certainly be appreciating it soon.

  8. Congrats on the new job and pay raise! I think it can be difficult to avoid at least some degree of lifestyle inflation- because you have been existing on so little for so long, and some things, like springing for more groceries in lieu of “expired” Starbucks goods, are only a natural step. I worked at a movie theater in college and took home huge bags of popcorn every night. There were plenty of times back then when the only thing I ate for dinner (or sometimes even breakfast) was popcorn. One summer when I was particularly broke I lived mostly on popcorn and animal crackers. Thank goodness those days are over! I think there can definitely be times when lifestyle inflation can be a good thing if it means you are living a healthier lifestyle with your increased income.

    1. Yeah, I look back on my first year in NYC with a lot of fondness but I never need to see another Starbucks breakfast sandwich or pastry again. The only way I avoided putting on a ton of weight was by being on my feet all day long. I’m sure you feel similar about movie theater popcorn!

  9. So I have the opportunity now to inflate my lifestyle and might succumb a little. Basically, we’ve been wanting to move to a nicer place (better location, same size) and we might when the lease is up. We have our eyes on a super nice environmentally-friendly building with hardwood floors and an in-unit washer and dryer, and it’s amazingly in our budget (although a little more expensive than what we’re paying now, it will still be less than 25% of our net income). And closer to Chipotle ๐Ÿ™‚

    1. An an in-unit washer & dryer?! THAT IS THE DREAM!

      I snagged an amazing apartment my first go in NYC, so I’m afraid to ever leave. It’s just unfortunate that the neighborhood might become too expensive. Damn gentrification process.

  10. Congrats on the bump! A little lifestyle inflation is fine as long as you’re making more progress towards you goals than you were before the raise. It’s always about progress, not perfection.

    Best of luck in the new job.

  11. Congrats on the new job, Erin! I don’t mind a little lifestyle inflation as long as it’s, well, mindful. ๐Ÿ™‚ Like you said, it’s nice to be able to consider dinner and movie without worrying about whether you have enough money for food for the remainder of the week. For us, as our jobs and income increased, we probably put most of the lifestyle inflation into nicer vacations since travel is one of passions. And then eventually into becoming parents. ๐Ÿ™‚ Kids don’t have to cost a fortune but are an added expense, although worth every penny! Thanks for the mention, Erin – truly appreciate it! Have a great weekend!

    1. Travel is absolutely one area I’ll also always funnel some money. It’s been a priority even when I didn’t have a lot of money, but it would be nice to be able to stay in cities longer than a weekend or not just make travel plans based on places I can couch surf with friends.

    1. Haha, maybe I’ll be able to get there! If I couldn’t each freelance gig as an individual job — I’d be well on my way. Or that pet sitting empire I had as a kid. ๐Ÿ˜›

  12. Congratulations on the new gig and the raise! I’ve tried really hard to ignore the last couple of raises that I’ve gotten and save that extra money. It was impossible for zero lifestyle inflation to incur in my early twenties because my first couple of jobs were super low paying (below $30K).

    1. I empathize! I didn’t break 30k until my PR job, but that one didn’t break 40k and NYC cost of living compared to Nashville probably put us on similar playing fields. You also have that awesome no state income tax situation down there!

  13. Congrats again on the big move! I am so excited for this next adventure for you!! And I was absolutely one of those people who was a victim of lifestyle inflation (in fact I am blogging about it next week). It is tough not to get caught up in it, but you have a great foundation, though, so I am sure you won’t go overboard.

    1. Thanks, Shannon and thank you for all the advice!

      I’m looking forward to reading your lifestyle inflation story. Hard to believe you made bad money decisions!

  14. TGIF. Congrats on your 8 jobs, wow. Talk about multitasking. Work hard and work smart to the road on how to retire a millionaire. At such a young age with so much knowledge and experience with finance, you will get there in no time. Which one of your 8 jobs is your favorite?

    1. Hmmm, favorite is a tough one. My time at Late Show was really fun, but it stopped becoming a challenge pretty quickly. I know I’m only a week into my new job, but I see it probably being my favorite because it challenges me everyday.

      Starbucks barista was certainly least favorite!

  15. Congratulations on the new job! I think everyone does that when they get a bump in money. We all have visions of the things we want to spend money on or the experiences we will now be able to enjoy. I think it’s good to have a little balance…put a little of that extra towards savings, then a little towards something for yourself.

    1. Thanks, Tonya. So far I’m planning to start putting some aside for a big international trip to India with a good friend of mine. Sounds like a perfect splurge!

  16. It’s easy to talk smack against lifestyle inflation but it’s a little tougher when you actually have it as an option. When you see a decent chunk of change just sitting in your account, the temptation is there to just eat out a little more or not worry to much about being frugal.

    What you mentioned about setting up your 401k is right on. Don’t even give yourself the chance to spend the money. We get yearly increases where I work and when that happens, I just bump up my 401k contribution. Any unexpected windfalls or extra money from work goes to student debt repayment. I don’t want to give my brain the chance to ruin my finances.

  17. My first few “real jobs” I always found it semi natural to have some lifestyle inflation, usually that depended on aspects surrounding the job. One job I increased my lunch budget because I had to “escape” work for an hour a day so I figured I would buy lunch elsewhere. Another I had to increase my budget for commuting expenses.

    I think the best thing for me was having forced lifestyle deflation. Basically in 2008 when the economy was craptastic I lost my job for a while and was forced to make really think about how I spent my money. Most of those deflationary lifestyle choices still live on! They didn’t go away because it made me be find a better and cheaper way to do some things in my life.

    Don’t get me wrong though, when I got a job after that I increased my budget again, but just not as much as I did before ๐Ÿ™‚

  18. My lifestyle has inflated and deflated. I’ve now found the perfect median. I really believe life is about living it and not scraping by whether by choice or poor decisions.

    Can I make coffee everyday and eat at home? Yes. But, I will splurge on Dunkin Donuts and bagels. Why? Well I’ve already planned for it and budgeted.

    I believe as long as you understand the type of life you want to live, know how much it cost and can cover the expense of it you are good to go. It’s important to not borrow your life away. It’s good to give yourself some pleasures as a reward paid in cash.

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