Is Lifestyle Creep Or Inflation Keeping You Poor?

Are you feeling that you’re getting deeper and deeper in debt although you’ve been earning more and more money? Do you feel trapped in a lifestyle that seemingly forces you to work more and more just to get by?

It is normal for poor people to struggle financially because they have no money. It is not normal however, when a rich person who owns a lot of expensive possessions struggle financially, but a lot of rich people do suffer financially.

Could these rich people be suffering from lifestyle creep/inflation? If you don’t know what lifestyle creep/inflation is, you might be its next victim especially if you are just starting to be much better off financially.

Lifestyle creep or inflation is defined by Investopedia as “an increase in spending when an individual&aps;s income goes up.”

“Lifestyle inflation tends to become greater every time an individual gets a raise and can make it difficult to get out of debt, save for retirement, or meet other big-picture financial goals.”

“Lifestyle inflation is what causes people to get stuck in a cycle of living paycheck to paycheck where they have just enough money to pay the bills every month.”

Lifestyle creep or inflation affects a lot of people from the very rich to the very poor. This is because money have the psychological affect of activating the pleasure or happiness cells of the brain.

The more a person has money in their hands, the more their brain’s pleasure and happiness cells are activated. The more the money is in a person’s hands, the more these cells are activated which could be very addictive.

For employees, lifestyle creep or inflation can be triggered by a salary increase or even by regular bonuses. I’m sure you’ve heard many stories of employees being so addicted to Christmas bonuses that they borrow money with the purpose of paying it with their bonus.

Then when they don’t receive a Christmas bonus or when it is insufficient to pay their loan, they become saddled in debt. This vicious cycle can repeat every Christmas bonus time or whatever annual salary increases these employees anticipate.

Lifestyle inflation or creep usually begins during childhood when parents tend to spoil their children with money and other material things. For example, if a child regularly receives the latest videogame console every Christmas, they would be conditioned to want one everytime.

This same brain conditioning can exist even if their family has no more financial capability to provide such extravagance. As such, these children throws tantrums and even blames their parents from not being able to provide videogame consoles for them anymore.

What usually happens? The parents of these spoiled children would feel sorry for their spoiled child and would go into debt just to continue their extravagant but unaffordable tradition of giving their children expensive gifts regularly. Their attitude is then passed on to their children.

For addiction, it usually only takes one try to get one addicted. For example, an employee might begin their work day by drinking office coffee which most offices provide free to their employees.

Then it so happens that one day, along their way to work, this employee saw a new coffee stand which they decided to try. The employee found out that the coffee from the coffee stand is much more delicious than office coffee and decides to buy the coffee stand coffee everyday.

Then the employee saw the doughnuts which were also being sold by the coffee stand and decides to give it a try also. The employee now decides to buy doughnuts everyday besides the coffee they buy from the coffee stand.

The employee cannot now begin their work day without first drinking coffee and eating doughnuts from the coffee stand, what might be their budget for a takeaway lunch is now being used for breakfast that they could have had eaten at home.

The same goes for everything in a person’s life. A person might be washing their car as a form of practice before but when they got the taste of letting a carwash clean their cars decide that they would just have their cars washed by a carwash everytime.

Of course. How many advertisements have you seen with the words: “You deserve much more…” or “You can’t live without…” which basically subliminally tells you that you’re not living life’s full potential unless you’re using the product these advertisers sell.

Then there some of people’s friend who would tell you: “Your clothes are too old” or “Let’s throw a party because you’ve just been promoted.” These kinds of friends tell you that you should spend money to be their friend.

Then there are partners and even in-laws who constantly nag you because you’re not providing your family according to their expensive standards. These people usually force someone to work harder in order to give luxuries to their family that they don’t really need.

This especially applies to people who marry partners who want to live the high life which most people in the world don’t realistically live. In many instances, their partners would threaten to leave them if they can’t provide for their extravagant lifestyle.

And lastly, we have spoiled children who always compare their living standards to what they see on television, online or from their rich classmates. To these children, their parents are not working hard enough if they can’t provide them with the luxuries that they demand.

What if you become a business owner now and is no longer an employee? Chances are, if when you were still an employee before and don’t receive a lot of bonuses, you wouldn’t want the same thing happening to your employees.

But there is an inherent danger in being too good. Remember that you’re doing already a lot of good for your employees by giving them a job and the salary that goes with it. When you are too good that you give them more bonuses than what you can afford, you might suffer.

This is because when things are repeated often, they become almost the standard even though they might not be right to begin with. For example, your company had a good year that you decide to give them more salary increases than normal.

Then the next year, your business profit nosedives. But this wouldn’t matter to many of your employees, when you give them only a small salary increase or they don’t get salary increases they become hostile to you.

This is because most employees don’t know how business really works, at the end of the day most employees only care of having high salaries and regular high bonuses too. This is why a business owner should control themselves and save their funds for the bad times.

The first cure is Money Management. Whenever your financial situation improves and you get more money than usual because of promotions, inheritance, jackpots and so on, you shouldn’t spend it all.

You should only spend to increase your lifestyle a bit but put a majority of your money into savings. This way, you gradually increase your lifestyle while at the same time always securing your financial future.

To be blunt: you should budget all the things you do in your life and not only money. If for example, you meet new friends who want you to spend more time with them than you can afford, you simply give them what time you can spare and not give in to their demands.

You should also not be bothered when people insult your spending habits. Spend only the amount of money you are willing to afford and it must be sensible to your status in life. Don’t spend a lot of money on a new sports car just because all your friends have one.

These friends of yours may be living paycheck to paycheck just to afford their sports cars. Don’t be insulted when they say you have a crappy car. They may have sports cars but may be living crappy lives because they’re not saving money and have to work a lot.

There are many people in the world today who are victims of lifestyle creep or inflation. A lot of them earn more and more money each year but they can’t seem to save money for their retirement or even for simple emergencies.

This is because there are a lot of people in society who are subliminally forcing other people to spend more and more as their financial situation improves. Subliminal forcing never ends: for many people forced into lifestyle inflation, there is never enough money to satisfy their needs.

You can combat lifestyle inflation by always having a budget limit in whatever spending situation you have so that you don’t go overboard in spending. One must also not be affected by the subliminal message of society to spend more as one’s finances improves.

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When I was still young and working in an office job I know of a businesswoman who was a millionaire but you would not guess that she was. I am not exaggerating but she always dresses in well worn short sleeved shirts and jeans. She owns several successful businesses but never drives a car. She also does not ride taxis but take ordinary transport...