Take time to ask yourself these questions. One: when you make a lot of money, do you immediately come up with ways to spend it all? Two: are you trying to keep up with someone else’s lifestyle, or the lifestyle that media portrays “you should be living right NOW?” Three: is what you buy never enough and must you continually catch up with the latest model/fashion/trend? Four: Are you living from one paycheck to the other, with little to no savings in between?
If you answered yes to most of these questions, it’s likely you’ve fallen under the habit of lifestyle inflation. And you’re not alone. So many people subscribe to this bad habit because it’s celebrated everywhere in media and our consumerist society.
This pervasive attitude makes us burn through our income very quickly, because no matter how much money we make, we spend exactly as much as we earn.
It’s not wrong to spend on necessary things. But the excessive spending caused by lifestyle inflation effectively kills wealth. It robs you of future income and keeps you hunting for jobs that can support your lifestyle. And when the day comes when you are either unable or unwilling to work, you’ll find there’s no more income to be had and you’ll still have the nagging urge to spend money.
Get past it: Cultivate the habit of paying yourself first: Whenever you make money, set aside a regular amount for savings. You may be tired of hearing that, but there’s a reason why people keep repeating it.
Why is saving paying yourself first? Imagine this: every time we get paid a wage, we don’t so much as make money as earmark it for other people. The government gets a cut from taxes. Then the electric, water, and cable companies get paid, followed swiftly by the telecoms, internet, transportation, supermarkets, even the tobacco and liquor companies. By the end you end up with nothing, or close to it.