What Lifestyle Inflation Means to Us

by Erika Torres

lifestyle inflationIn addition to saving $30k this year, another goal Eric and I had was to enjoy our increase in income by allowing ourselves to indulge in some “lifestyle inflation.”

Lifestyle inflation is practically a dirty term in the personal finance community, because a lot of people believe that lifestyle inflation is what causes a lot of people to remain in a debt cycle.

That can be true…but I call B.S.

Two years ago, Eric and I lived in a shack. Are we supposed to remain in a shack for years simply to avoid the dreaded lifestyle inflation?

I think with all things, you can find a balance between improving your lifestyle as your finances stabilize–we’ve paid off $45k in debt in the past few years–and sticking to a budget that still allows you to save for the lifestyle you want.

For us, these are a few of the things that have happened in the past few months, thanks to lifestyle inflation:

  • Convenience: Thanks to lifestyle inflation, I can now choose convenience over price sometimes. For example, I no longer go out of my way to find the cheapest gas station. Most of the time, I go to whatever station is closest. Lifestyle inflation has allowed me to be okay with paying $4.09 for gas, rather than driving to Costco and waiting in line for $3.97 gas (which translates to like a $1-$2 in savings per fill-up???)
  • Replacements: Little things that we would hold off on buying before, we can now purchase on the spot without feeling like it’s going to make a significant debt in the budget. I remember two years ago when we needed to buy a house phone, I asked everyone if they had a spare. It’s not like a house phone is expensive, but it was an extra expense that we didn’t really have room in the budget for, you know? Now, I make these purchases without having to overthink it–but all within reason. Like I recently bought new pillows, and a curling iron. Can I tell you how RICH I felt being able to buy pillows? I was all like “Oh hey we should really buy new pillows because ours are kinda gross.” And I did the next day at Costco. BAM–and that’s why it pays to be debt-free!
  • Treating ourselves: When we lived in the shack, we could only afford to go out to eat about once a month and I always had to really think aflowersbout whether I needed a second glass of wine. We definitely go out to eat a lot more now–and we thoroughly enjoy it. Another thing? I LOVE buying fresh flowers at the Farmer’s Market. And I do it almost twice a month now. I spend probably between $5 and $10 each time, but man oh man, I love me some fresh flowers on our dining table.
  • Giving: We can give more. While we may never tithe the full 10%, we have definitely stepped up our monetary donations. And that’s something that really makes me happy.

Even with all this lifestyle inflation going on, there are some things I still won’t do.

Like go to Starbucks all the time. I can count on one hand the number of times I’ve been this year. Eric is another story, since he thoroughly enjoys Starbucks, so I guess we balance each other out  in that arena.

I still pack my lunch to work everyday–not only is it cheaper, but it’s healthier too.

I cut Eric’s hair now. We could probably fork over the cash for Eric to get a cut every two weeks or so (he has to keep it short for work), but instead we invested in a trim set, and I do his hair. This saves us at least $40 a month.

So there you have it. We’re allowing ourselves to indulge more often, but we’re still loyal to our frugal roots.

What type of lifestyle inflation do you enjoy? 



Sam Smith November 5, 2015 - 6:35 am

Its really far better to have full control of our finances than gets broke without knowing it at all. You will just get shocked you have nothing left in your pocket.

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Kellie April 29, 2014 - 11:09 am

Just catching up on reading your blog since I didn’t read a SINGLE blog during my maternity leave. Idk how I managed that.. Anyways, was definitely surprised and interested to see you tithe. We tithe to our church too (or should) but struggle with it when we are in eager pay off debt mode. Would be interested in hearing more about your tithe, how you decide, what you did when you were paying off debt.. if you are willing to share!

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hmd March 24, 2014 - 7:46 am

Okay, lets see….I just bought my very first Smartphone which is a Iphone 5S! and omg it is gorgeous! it is okay for me bz I really don’t buy anything( I don’t buy anything that I don’t need, ex: two pair of shoes or two bags are enough for me)!

I never had a smartphone before and I work really hard last year, so I totally deserve it! and anyway I will use it for very very long time! trust me i will!

Storewars News March 24, 2014 - 1:55 am

Nice read! Very informative. Did you know that Walmart has a tool that gives competitor prices? Full story here: http://bit.ly/Q6kKG0

Teacher Girl March 23, 2014 - 11:45 am

I think the choices you guys made are smart and well deserved. You have accomplished SO much regarding saving and paying off debt. This is your reward =)

cranes for sale March 19, 2014 - 4:46 am

I try to focus all of my lifestyle inflation on enjoying experiences

Melanie@Dear Debt March 18, 2014 - 7:49 pm

I want the lifestyle inflation you have! I would like to upgrade to a 1 bedroom instead of a studio, take Car2Go more and not bike or bus everywhere, and stop feeling so guilty if I go out occasionally. For me, it really is about convenience and what is worth my time. I think a little inflation isn’t bad, but when you start spending what you make that’s a problem. Things still have to be proportional to income and debt.

Leonard @ The Wallet Doctor March 16, 2014 - 11:23 am

I don’t think you need to totally avoid lifestyle inflation. The trick is responsible moderation. So long as you keep a mindful eye on what is reasonable and what isn’t you should be in good shape. Similar to you, my lifestyle inflation is going out to eat. Its so nice to have others prepare a meal and you can just focus on enjoying it.

Erin @ Gen Y Finances March 15, 2014 - 3:28 pm

I can’t wait to enjoy the luxury of replacing things without a second thought. I haven’t had normal bras in a month and a half (stolen from suitcase) and I finally ordered two new ones today after waiting until I had the extra cash. Thankfully, as a freelancer, I have the luxury of going bra-less 95% of the time 🙂

Daisy March 14, 2014 - 6:39 am

I’m not against lifestyle inflation. A few years ago, when I was going through school, we lived in 400 square feet (me, J, and the dog). We never really did anything fun because we couldn’t afford it, save for going to the cheapest possible pizza place around. I drove a crappy car that was older than I am (no joke) and we ate the cheapest possible food.

I think lifestyle inflation is good and should be expected in moderation. We started eating well when I graduated and started making more money, and we moved and bought a house. We are still living well within our means but it’s much better now.

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Catherine March 13, 2014 - 6:04 pm

Dude, I love this and totally relate.

I can’t wait for the day when I’m not so cheap that I’ll buy a new bra before the old one literally breaks when I’m wearing it. At work.

Anna March 13, 2014 - 10:29 am

I totally agree with this. Life inflation doesn’t have to mean you go out and buy a porche or diamond necklace, just enjoy the simpler things in life. Even if that simpler thing is a new appliance.

Remember that movie “It could happen to you” when they won the money. The wife went off shopping at all the expensive stores around New York spending all over the place where the waitress was just happy buying macadamia nuts and listening to the credit card company say her balance was zero and they were going to raise her card amount. I know that’s different (they won the lotto) but people take things different with money.

Jordann March 13, 2014 - 7:17 am

Oh man, I totally agree about being able to afford the necessities. I absolutely LOVE being able to buy things for the house that are completely necessary (like lightbulbs) without agonizing over it too much.

Giulia March 13, 2014 - 3:15 am

Great job, you’re been good on savings, plans change habits…packing lunch is cheaper but is thousand times healtier , .Congratulations for all your results!!!

Emily @ evolvingPF March 12, 2014 - 3:31 pm

I call this “lifestyle increases” instead of lifestyle inflation. Like you, when our salaries jump we definitely are going to live a higher lifestyle. My distinction is that INFLATION is mindless while INCREASES are chosen for highest value for you personally.

Katrina March 12, 2014 - 2:35 pm

We haven’t had any big income increases in recent years, but we have learned to manage our money better. This means we can add little things to our life that we felt that we couldn’t have when we first got married. This summer my husband should have a full-time pastor’s position. Even though he keeps reminding me that he won’t really earn much more than I make now, I can’t help get excited about the prospect of having a consistent income with benefits. 🙂

CeCe @Pink Sunshine March 12, 2014 - 1:35 pm

I actually think there are people that would say you should have stayed in the shack but I totally disagree Look at all these micro mini homes that people are talking about as the ultimate ways to cut costs and reduce use. I do not want to live that way though!! I think it’s possible to find a nice balance so that you can enjoy some things you want out of life. Otherwise I’m not really sure what the point of it all is.

newlywedsonabudget March 12, 2014 - 2:14 pm

Right?! There’s gotta be a balance between overindulgent consumerism and barebones minimalism. As long as we are happy with the financial choices we’re making, we’re doing fine financially, and we’re not buying things just to keep up with the Joneses, we’re on the right track. I think.

Jessica March 12, 2014 - 10:30 am

I totally agree! within the last year our income has modestly increased about 15k a year which has allowed us to purchase a 2010 Honda Accord vs driving our 1995 almost dead Nissan. I think as long as it’s done within reason lifestyle inflation is just a part of life and benefits from working so hard to be at a stable financial level in your life.

SavvyFinancialLatina March 12, 2014 - 7:21 am

There has been lifestyle inflation in our lives. We bought a house. We are spending (cough me) money on furnishings, whereas before it was all handy me downs. Still a lot of handy me downs, but we are investing in some good pieces. We spend more money on healthy food. Our food costs are higher than I would like, but that’s really where we spend money apart from mortgage. I do buy things without worrying about paying for them. But I still do delay some purchases as much as possible because I think I’ll have more money the next month. So far, we have been going $500 over our budget ever since the end of 2013. Still trying to decrease it the discrepancy.

newlywedsonabudget March 12, 2014 - 9:37 am

Our budget has definitely changed since we paid off our debt… might be interesting to dissect that a bit!

Kathy March 12, 2014 - 6:40 am

I’ve often wondered why people strive to accumulate a million dollars if they don’t plan to use it for something. Of course I don’t mean instantly buying a million dollar house. But like you said, why continue to live in a shack when you now have the means to do better. With no reward at the end, the sacrifice hardly seems worth it.

newlywedsonabudget March 12, 2014 - 9:35 am

YES! You hit the nail on the head.

I want to enjoy our income now, not thirty years from now.

Mrs. Snarkfinance March 12, 2014 - 2:19 pm

I agree! There has to be a balance. I don’t want to save and save and save until I’m too old to enjoy it. I want to be careful, plan for retirement etc. etc. but if I’m well on my way to reaching my financial goals I want to skim a little off the top to treat myself every now and then.

Michelle March 12, 2014 - 5:36 am

Buying flowers is a part of my lifestyle inflation as well. I used to never do it, and it’s a nice little reward for myself.

Our spending is actually not that much different from what it used to be. We used to spend to much and we are now reeling it in.

newlywedsonabudget March 12, 2014 - 9:35 am

It’s funny how $5 or $10 a week can bring me so much happiness!

Mrs. Pop @ Planting Our Pennies March 12, 2014 - 4:17 am

For me, it’s being stuff like spending a little more to have a gym right near our house rather than far away. Or after 5 years and paying off a lot of debt and accumulating a lot of savings being okay with spending money to redo the floors in our house. Fancy, I know. =)

newlywedsonabudget March 12, 2014 - 9:34 am

i would love me some fancy wood floors!

i think lifestyle inflation for us is all the little things I mentioned above but also being able to afford some of the stuff we’ve put off, like travel and actually buying new things because we can afford it, rather than being forced to buy used. It’s at least nice to have the option.

Tanner March 12, 2014 - 4:11 am

I think lifestyle inflation is something that is normal to happen once you’re in a good place. The reason it’s so feared is the same reason most credit cards are feared… one slip, and you may be back on the theoretical ‘shack’. I personally like using credit cards, paying them in full each month. As long as you’re in control of what you spend, and have an extra safety net in case you slip, I don’t see why you should deny yourself better things. Thing is people that think lifestyle inflation think going from spending $1k a month to $3k a month, a new car payment and biweekly spa visits at $60 per pop. “Live within your means” is a double edged sword; yes, if you’re in debt, your means are smaller. But when your debts are gone, your means are larger, so you need to inflate to follow that path.

I’ve been thinking about paying for a gym membership once I’m done with my debt, and also move back closer to work. I believe I’ll continue with my same budget for other things (food and misc), but I’d love to go on a clothing shopping trip and not feel like I should be publicly shamed for buying a $20 shirt that I’ll love for years. (Havent been able to bring myself to doing that yet)

newlywedsonabudget March 12, 2014 - 9:33 am

who would shame you for buying a $20 shirt????

I think you make excellent points. People should definitely live within their means. However, I think too often in the PF community, there are some bloggers who think that they know how other people should live or feel that they know a better way to handle their finances. There’s too much of “look how frugal I live! we’re saving ALL our money and eating ramen every day!” type of attittude going around, instead of “look how we’re able to enjoy the money we earn while still being financially responsible.” I guess that’s just not as glamorous to write about….haha.

moneystepper March 12, 2014 - 4:08 am

Lifestyle inflation is all about control. The point of building more wealth is to be able to enjoy the experiences in life (which often cost money).

However, what the PF world is recommending (I hope) is to not just upgrade your car “because I got a raise/bonus” or move to a bigger house because “they bank will now let me with my bigger salary”.

I try to focus all of my lifestyle inflation on enjoying experiences more frequently in life (going skiing one extra weekend a year, for example).

MoneyAhoy March 12, 2014 - 10:48 am

Exactly! It’s when you lose control that the train begins to come off the tracks!


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