What is Lifestyle Inflation?

Inflation is the rate of change in prices. Lifestyle inflation, on the other hand, is the cost of increased comfort in our daily lives that might take a while to notice. It starts off very small and creeps up gradually but eventually it becomes sticky and ingrained into our budget. A Prime example of this could be Netflix or a food delivery service like Blue Apron. These food delivery or meal delivery services undoubtedly cost more money than making food at home and there are usually considered something “new” that we typically weren’t paying for in the past. If you weren’t paying for this service a year ago but you are today, that is lifestyle inflation. These budgetary additions are additions to our lifestyle and way of living that usually make our lives easier. Little by little these life comforts can weigh on our budget and lead to increased expenses. However, some don’t really add value to our lives, and those are the ones we need to prioritize removing from our budget ASAP.

Lifestyle Inflation Creep

The creep of lifestyle inflation starts off slow. First, we start ordering out food every other night. Then we stop cooking at home altogether, then we start going to restaurants every single night. This might appear to be a dramatization but it is exactly how lifestyle inflation starts out. Everyone is susceptible to it. We all experience this to one degree or another as we progress through life, regardless of our incomes.

Differences in Comfort

What might be considered outstanding accommodations and extreme comfort for one person could be akin to modest to poor accommodations for another. There are places in the world with no televisions or running water, so if you bring someone to a modern home in America or even a modern hotel room it would be a night and day difference for them.

Practicing Gratitude as a Means of Combatting Lifestyle Inflation

It’s not always easy to simply cut everything out from our lives. In order to effectively combat these things, we need to do so with an open mindset and from a place of appreciation. When we are appreciative for what we have, we can live more contently. This one practice can help keep us within our budgeting goals.

Cutting Down on The Little Stuff

We often assume there are some things that we could just never live or do without, but that simply isn’t the case. We are afforded many luxuries in the free world but a lot of these things are not “needs” and some can be a strain on our budget. Many of the things that we highly value are actually small and insignificant in the grand scheme of things. It’s highly unlikely that we need to be paying for 7 different streaming services concurrently! We have to learn how to eliminate some or possibly even share with family members (if it’s still allowed depending on the streaming provider).

Easiest Things You Can Cut from Your Life

In order to help battle lifestyle inflation, one of the easier things you can remove from your life will have to be subscriptions. Subscriptions are typically the easiest target and they are readily available for viewing on your account statements. Cutting down on something like groceries or entertainment on the other hand is going to require a more mindful approach. You’ll need to actively think about your spending and how to go about reducing it. This is a more mindful approach than just simply removing a subscription from your credit card bill. The same goes for entertainment. if you go out to the Movies every Friday night, this is essentially a habit that must be broken and breaking habits aren’t always an easy thing to do.

Budget & Future Cash Flow

Whenever you decrease your monthly budget, you’re cutting down on future costs and freeing up future money. This might seem like an obvious thing to many but if you save $100 off of your budget each month, that means you will have saved an extra $1,200 per year off your monthly budget. You will no longer have that expense going forward so you can use it for something else altogether. That money could be allocated towards retirement, savings, investing, etc. Cutting unnecessary costs whenever possible is a great thing to do, its’ not always easy but it’s doable. Give it a shot and your future self will thank you!