If you believe dollars are supposed to be spent, not stacked, and most of your monetary decisions are made on the basis of "you only live once," statement, then you may be suffering from a common, yet a detrimental disease known as, lifestyle inflation.
Lifestyle inflation Ã¢ A fresh outlook
Lifestyle inflation implies splurging without a proper reason. For example, you've been granted a holiday bonus, apart from packing your bags for the tour, you end up buying a whole lot of new dresses, just for the trip. This is what actual lifestyle inflation is. It's good to get a raise. But, instead of increasing the luxuries in your life, . So, the next time you receive a raise, say no to unnecessary costs, but inch closer to better and stronger financial health.
Basically, the fault isn't totally yours. Lifestyle inflation has actually been ingrained in our lives since ages. And adding fuel to the fire is the keeping-up-with-the-Joneses attitude and consumerist culture. These are some of the factors that are ever so present in the precarious financial situations, we are made to undergo. To find out how you and people like us hurt our financial health, then read along.
1. Absence of a proper budget
If you press on leading a more expensive life over a financially responsible one, then all your thought of creating and following a budget will ultimately go in vain. Moreover, it is very likely for you to have a vague idea about how much you're making in a month and what your expenses are. The problem is you don't heed to the otherwise financial woes that could be lurking around the corners.
There are 101 ways to financial management. One of those ways are conceptualizing, documenting and following a practical budget. Yes its true Ã¢ budget Ã¢ is a tasteless word, one that puts you to sleep, once you hear of it.
But consider this, budgets don't have to be complicated. It can be an easy two-category budget or detailed into dozens of line items. Pick whichever style suits you best. Any budget at all is better than wondering where your money has gone.
Contrary to popular belief, budgets need not be a tedious and complex job to do. All you need to understand is how much you are going to spend on which item every month in order of their increasing importance. There are many online budgeting apps available for free. You can use them at your leisure to streamline the budgeting process. Choose whatever strategy appeals you the most. .
2. Absence of savings
If you spend every penny you earn, then it is obvious for you to be left without any savings at your disposal. This is quite .
Unfortunately, you don't seem to realize how a dependable amount of savings fund can protect you from future financial emergencies. The fact is that you don't know when and what might go awry, and put you in a sticky situation. For example, your car can break down in the middle of a road all of a sudden Ã¢ a similar disaster could strike your home, your health, etc. However, you know that disaster do strike but without any warning. You won't have the time to brace yourself either financially or otherwise when a disaster will befall on you.
So, , as a result, you'll be ill-prepared for your retirement too.
3. Absence of a retirement plan
There are many reasons for not having a definite time-frame of hanging up your boots and get in to enjoy your golden days. This mainly happens when you're used to inflating your lifestyle. The is, the . Consider this, over the years of your work life, you've bought some of the most expensive vacation homes in your locality, got installed theater-grade music system in your living room, the motorcycle and so on, but sadly, you never got the opportunity to relish them, as you had to work harder and for extended hours to fund your desires.
Finally, when you do have the leisure to enjoy the good things you've purchased in your life, then you do it in a larger-than-life way, which basically, keeps the vicious cycle of irresponsible purchases rolling, and hence, debt.