People generally tend to spend a lot on unnecessary things; this happens when people get increments or progress in social status, and this tendency is called the lifestyle inflation. And this inclination can prevent one from being wealthy as it limits financial growth.
The major cause of lifestyle inflation is the mentality of trying to match up to their friends or business associates; leading to desires like owning a car, living in luxurious neighbourhoods, hanging out at exotic places, admitting kids in the expensive schools etc.
Every financial decision that one makes today reflects his future, in line with the saying “reap as you sow”. The following ways can be opted to be safe from lifestyle inflation:
- It is good to put forward and differentiate between your necessities and luxuries.
- Always evaluate wisely if a potential purchase is a need or want.
- Saving and investment are the best ways to keep a track and also pile up your sum.
- Choosing the right investment project ensures that your money is directed to profitable percentages that will lead to great benefits in future.
- The most effective way of managing lifestyle inflation is by maintaining online accounts like the PayPal account; wherein you can keep a detailed check on your expenses and purchases.
On-line accounts can be wired to pay school fee, insurance, emergency funds, house rent, loan repayment and even holiday savings; by doing this, you will be left with the exact sum of your saving.
Good financial management skills can help you manage the problem of lifestyle inflation; it is good to carry out researches on financial management habits to enhance your financial management skills.
One has to remember that he is the one to determine how well his extra income will effectively be used.