Where did that raise go?

A trap most of us find when in the laboral world is the pressure to spend more and more as we raise up the corporative ladder, where by each increase to our salary we end up spending twice as much, leaving us in the short term with a little sense of satisfaction for all that hard work earned us, though in the long run leaving us more and more stressed as bills, debts and mortgages begin to come for that expensive vehicle we bought 6 years ago. The name of this phenomena, which is common in much more people than you would think, is lifestyle inflation. In this two-part series of articles I'll explain what lifestyle inflation is, which people are more affected by It and how to combat this line of thought through simple strategies. Let's begin by defining more technically what lifestyle inflation is:

Lifestyle Inflation

As I've mentioned in the introduction, Lifestyle Inflation refers to an increase in spending that accompanies increases in a person's level of income, usually leaving them with higher debts and the inability to pay for financial goals that they might had projected for the future.

Now that we know what we're talking about, let's revise usually the two sectors of the population are most commonly affected by lifestyle inflation:

1.- College Graduates

Is easy to get all crazy with your expenses as you get out of college and land into a real corporate position. All those days of working midnight shifts and studying the other half of the day while subsisting in frozen meals and ramen are over, and now you finally can get a grip to a real salary. The usual job rookie will spend his newly obtained monthly income in expensive dinners, hanging out on weekends, cars that are way more expensive than they can afford and pointless vacations. At the end of the day they are left with a lot of bills and a lot of things that they can't really maintain, so they are forced to lower their lifestyle and experience the pain of getting too accustomed to something you can't really sustain.

2.- Workers with Increase in Salary

Another thing that is common to see is someone with a desk job that gets promoted to a higher stand in the white collar hierarchy, with all the responsibilities and increased working hours that come with It, though at the end of the day, they won't give It a second thought and sink their teeth right into It because of the increase in salary. What do they do with that extra cash? they usually upgrade to a better house, better cars and have nicer vacations. In the first months, they will surely enjoy the fruits of their labour, though by not considering the downsides of that promotion, being the lesser time to rest and spend with family along with the increased level of stress they end up in a miserable cycle of suffering with a continuous increase in spending as they get better positions.

Now that we know about the dangers of lifestyle inflation and examples to showcase that, we can begin to talk about the strategies that we can implement in order to combat this trap that can catch us If we don't look consciously at our level of expenditure, strategies which I will explain in the next article. As always, thank you for your support and good luck!