Inflation is certainly the buzzword of 2022, with what started as something somewhat abstract (“wait so something about the monetary supply rising more rapidly?”) is now very real (“wait how much does: gas, groceries, eating out, virtually everything cost?) and something we all likely feel on a daily basis. This is not going to be a post on inflation, or what to do about it – if you’re curious I have written a blog post a few months ago talking about the topic. Instead this post is going to be about another inflationary topic – lifestyle inflation. I was inspired to write this post after chatting with Mrs. Money Finance last week on how no matter how much money we seem to be earning (thankfully we’ve worked hard, gotten raises/promotions), we always just seem to be scraping by.

I was reminded how early in the blog (9 years going strong!) I used to have a saying – learn how to manage your money when you’re just starting out otherwise you’ll never be able to manage it. The idea is that managing money, being disciplined and thoughtful about how you spend your money isn’t something that gets easier the more you have of it. I feel like I’m living proof of that statement – telling Mrs. Money Finance that we always seem to be waging a losing battle with our budget and finances.

I’d love to break down (lol most of this blog just feels like therapy for myself) why I’m only partially upset at myself for not having a better grasp on my budget/finances, why I’m actually doing ok, and just a general reminder for readers on why this statement is true!

Why I’m only partially upset

First things first, I’ll just call it out that life is expensive. Even pre-inflation I felt the pressures of being a young professional and a variety of expectations that came with it. I love going out to restaurants; I love trying new ones, going back to old favorites, enjoying good food and good company with friends, family and even the date night that Mrs. Money and I are trying to better prioritize. Eating healthy (which is becoming more and more important to me the older money finance I get) isn’t cheap, and neither are the other quality products we buy. I do really enjoy travelling and try to take a few trips (big and small) each year. It gets even more expensive when you throw kids into the mix; daycare, more food and clothes, another seat(s) on the airplane, and all the activities (swimming and soccer right now for us). But you know what? I love it. I love (mostly) every minute of being a Dad and feel blessed that we can provide for them. So, all that to say, even though these many things in life are expensive, they’re all necessary and mostly good things for us!

Secondly, I think it’s important to enjoy your money. We work so hard, grind many hours each week, and it’s all for what end? I mean yes it’s important to pay bills, pay your rent/mortgage, have food on the table, but life is also about enjoying yourself, having fun, making memories and living a balanced life. I am learning that life and enjoying it can look different for every reader, and even can look different depending on what stage of life you’re in. I will say that I like to prioritize my own (and my families) wellness and happiness and try to maximize them. Yes we have bills but I try to be less upset or concerned with spending money on other things in life; especially if they’re bringing us joy and happiness!

Why I’m actually doing ok

Whenever Mrs. Money or myself is fortunate enough to get a promotion or raise at work, after perhaps an initial celebratory dinner or ice cream, we then get down to the process of updating our budget. We budget every dollar of income and expenses meaning if we earn $1,000/month, we know and plan and reconcile every $1,000. Hopefully we’re putting $250 of that to savings, giving some of it away and then probably spending the rest. So if there’s more income coming in, we’re going to have to make a plan or ensure we’re putting that in the budget so that we know that we can spend it. So when one of us gets a raise; we’re thinking how we can spend/save that money. Rather than just putting all of it to the ‘general living or fun’ bucket in our budget, we try to be responsible and plan to save/invest about half of it while also planning to spend the other half. Because we’re attempting to be responsible and not spend all of the new money we’re bringing in, I feel like we’re actually doing ok. Yes our spending is going up but also so is our savings.

Secondly, I always have to remind myself (which is probably a good thing because if I thought about it more often I might be tempted to pull back) that I am saving 30% of my salary right out of my paycheck. I have instructed my employer to pull out 15% to put in my 401(k) for retirement and also have instructed them to pull out 15% for my employer stock purchase program. I can have them set aside money each paycheck then once every 6 months they purchase stock for me and I get at a minimum at 15% discount. That’s a guaranteed 15% return on my investment in a 6-month period and it’s hard to beat a return like that! So, whenever I feel bad about how much money we’re spending, I remind myself that we’re actually saving/investing a large chunk of money, it’s just hidden behind the scenes and I don’t see it in my paycheck!

Thirdly, our net worth continues to grow and our debt continues to decrease. I really like to focus on forward progress, no matter how incremental or slow it might be. Some years will be better than others but as long as I’m growing my overall net worth I feel ok! We’re also not racking up credit card debt (which would be a bad sign in my opinion of backwards progress) and continue to pay down our mortgage each month. Forward progress!

A general reminder

Ok, now that I feel a little bit better about how maybe our lifestyle inflation isn’t as bad as it may seem end of month when I’m looking at our budget, I’d love to toss out a general PSA reminder to readers. Lifestyle inflation is real and it can slowly wick away at your progress if you’re not careful. Bigger paychecks can often come with bigger temptations to upgrade other areas of your life – a bigger house, a bigger vacation house, a bigger/nicer car, a boat, more expensive trips, the list goes on! On the one hand I do think it’s fair to have nicer things – you’ve been working hard and it’s important to celebrate and reward your success. On the other hand, it’s important to make sure your spending or attitude towards what you ‘deserve’ doesn’t get out of hand.

How would I recommend you do this? Firstly, try to save/invest in percentages. As previously mentioned, I’m saving 15% for retirement and 15% to purchase my employer stock. That’s 30% and that 30% stays the same if and when I get a raise. Outside of that we do try to save/invest (which has proven hard if I’m being honest) but we still try each month. Figure out what you can reasonably save/invest and stick to that percentage, not a number. You’ll thank yourself as your saving/investing grows over time. Secondly I’d try to keep things in perspective. Life is a marathon, not a sprint and focus on your own growth and development, less on what others in your peer group are doing. Although it’s never easy, try to avoid keeping up with the Jone’s (i.e. your neighbor, your friend, your colleague that you find yourself comparing yourself to). They are living their life and you are living yours. Figure out what’s important to you, what brings you joy, set your own goals and work towards them!

Summary

Always remember – learn how to manage and be successful with the amount of money you have now (no matter how small or large) and if you can do it now, it’ll only get easier in the future!