Sunday, June 22, 2014

Lifestyle Inflation Will Kill You. Really??

I imagine the days back then when I started entering the workforce and getting my first paycheck. It was $2,600. And I was thrilled. Never in my life had I earned so much money just by doing some simple analysis at work. To feel them physically, I even had them withdrawn so I can feel the number of $50 paper bill on my hand. Lifestyle was good back then as I upgraded my eating habits, appearances and IT gadgets. Since I was single back then, the money are mostly expensed off these items.
 
 
A couple of years down the road as I began to accumulate more working experience, my pay increased exponentially. And so was my lifestyle habits. I began upgrading my eating habits, appearances and IT gadgets further to the next level and the money was soon spent on these items which I hardly had any memory today. I figured out back then if I was earning $10k to begin with, I would probably had an equally $10k expense to end with. At that moment, I realised lifestyle inflation was going to kill me if I was persistent in living the rich lifestyle.
 
The rest was history.
 
I had some people asking me if I downgraded my lifestyle habit since I pursued my financial independence journey. My answer to them is not really. Both my wife and myself continued to eat gracefully at restaurants which we wanted to explore (The Sushi Grill & Bar at Wisma Atria was really great btw), we shopped for clothing and accessories (a few branded will not kill I suppose) which we think will improve our appearances and we bought well-equipped IT gadgets (I hope my Note 2 Samsung is still not out-dated) to join in the latest trends. So the answer is we are still upgrading our lifestyle, albeit at a lower pace than our increase in income (both passive and active).
 
I know a few people who was extremist in going the savings path and credit to them, they have managed to do it. But I thought life wouldn't be as fun as we needed it to be. Again, these people might argue the case for the definition of fun so it's really a perspective situation.
 
The truth is if we are able to do these 3 things: Conscious of the danger of lifestyle inflation, understand the things we enjoy and splurge with activities you can afford, then you'll be fine as you did before.
 
You do not need to avoid lifestyle inflation completely but at the same time you will be able to maximise your marginal utility on happiness. Now, that is what we really want.

Does lifestyle inflation bothers you? Do you have friends who are extremist on the two sides of the poles?

10 comments:

  1. B,

    Middle path has a nice ring to it if you are spiritual.

    And if you are agnostic like me, moderation sounds just as nice ;)

    ReplyDelete
    Replies
    1. Hi Smol

      The middle path is where most people are seeking and striking to keep a balance. It is difficult to quantify where one is going and may drift to the extreme if not careful.

      Delete
  2. Low or mild inflation is acceptable.

    ReplyDelete
    Replies
    1. Hi Uncle CW

      Low lifestyle inflation would be taken over by the real inflation sooner or later. LOL

      Delete
  3. As long as within our means and strike a balance, no need to be so mean to ourselves lar! ;-)

    ReplyDelete
    Replies
    1. Hi Richard

      Yep the theory is there but its not always so straightforward to follow. I can be guilty of such at times too following my other side of the character. :)

      Delete
  4. Replies
    1. Hi PIB

      Yin provides energy and Yang provides the money?? :)

      Delete
  5. Great read. Indeed, this is the dilemma we face in today's world. To give in to temptations and the desires of the human heart or not. This is something that is difficult to manage given the nature of today's world, where we are influenced by the latest fashion trends and the media

    ReplyDelete
    Replies
    1. Hi Dividends101

      With the ubiquitous of social media and the latest trend, one is tempted to follow the trend and social pressure.

      Delete

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