How not to live from Paycheck to Paycheck Avoiding the Lifestyle Inflation Trap – A Midlife Perspective.


How does Lifestyle inflation happen

Be clear on what you need and want

Have a financial goal

Mind your circle

Learn to delay gratification

Embrace living below your means


You’ve lived out Life’s script, worked hard to make great grades, worked hard to earn, surely you are deserving of the finer things of life. A little treat here, and there, before you know it lifestyle inflation sneakily starts to creep up on you.

How does Lifestyle inflation happen

Lifestyle inflation happens when you increase your spending as your income goes up. For example, when you get a promotion or switch jobs where there is a pay rise, the spare cash from this tends to be spent on things you previously went without but now choose to buy because you can afford it! This tends to go unnoticed by even the most adamant budgeters if left unchecked.


Lifestyle inflation like all kinds of inflation is ravaging; it happens slowly, one decision at a time. The dopamine hits, your ego is stroked and you feel good with your new toy. The lurking danger of consistently upping your living costs is the risk of living paycheck to paycheck, constant financial stress, and things that eventually own you.

Midlife perks include a higher earning potential but with this comes the trigger, the need, the want to spend to catch up with the Jones, or worse still Instagram! It is counterproductive to increase spending at any opportunity and still expect to grow wealth.

Income Earned = Income Spent

Living paycheck to paycheck on a high salary is often the result of this kind of behavior. You might even find that you are back to square one or sometimes worse off than you were before.

Opulence can weigh you down and detract from your financial goals. Think of a ship with wind in its sails being loaded with so much cargo – the cargo of expensive housing, cars, designer clothes, and expensive dinners fit for a king. Eventually, these things start to weigh the ship down, causing it to slow down and derail not reaching its destination.

The destination of meeting your financial goals, and staying financially well and secure becomes more pressing as time passes.

Investing £500 made from a salary increase in a normal index fund over 20 years gives varying returns as analyzed in the table below. Each 1% rise in return gives around an extra £35,000 and the higher the return goes. It is always a nice surprise to have more in savings than not enough.


Return over 20 years

Monthly contribution









Before you take that next swipe, think about these things:

Be clear on what you need and want

This is the story of luxury and necessities, if you’ve ever found yourself wanting something so bad and realizing the urge for it waning once you have it you are not alone! It is the insatiable nature of humans at work.

The want for more and even more as resources grow is unending. Because we have the innate ability to want and strive for more, it can be hard to find the limits between possessions that are needed and things desired.

Have a financial goal

Where there are no goals, there is no plan! Money not planned for always finds a plan for itself!

The money would be used up and spent without clear financial goals in place.

Mind your circle

Lifestyle inflation is sometimes associated with the company you keep. Get rid of environments that pressure you and viola you lose the pressure to compete or conform to unrealistic standards of success.

Learn to delay gratification

When delayed gratification is practiced by postponing the purchase of non-essential items, it gives time to think about whether you truly need or want an item.

If you find your desire for it not diminishing over time, then you have the opportunity to consider other options to purchase the item. Perhaps a cheaper alternative might be available. Either way, you can avoid shopping on impulse. Several financial articles recommend the 30-day rule.

Embrace living below your means

These days frugality has a bad rep and is seen as being miserly to oneself. Consistently living below your means allows for more savings, disposable income for investments and the added financial security of having lower expenses should life emergencies hit.

Sometimes the things you love don’t have to cost the world to enjoy.

Think about the quote below,

“The things you own end up owning you. It’s only after you lose everything that you are free to do anything”

  Chuck Palahniuk


Mindful spending habits and consumption, sensible financial decisions, and prioritizing investing over the craving for another designer bag you don’t need can help nib things in before they go out of control. Never be a prisoner to possessions and not fall into the trap of acquiring liabilities that feel good at the time of acquiring them.

If you still feel the need for that treat don’t deprive yourself, start with little commitments like putting a portion of a raise or bonus towards savings and investments. Remember, little positive steps count and compound over time.

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