Welcome to the wonderful world of lifestyle inflation.
Actually, lifestyle inflation isn't so much a world as it is a never-ending cycle of needing anything and everything new.
It's upgrading to the 63-inch flat-screen television because 58 inches simply wouldn't do. It's buying the bigger house in the suburbs just because you've landed a new job and can finally afford the bigger house in the suburbs. You don't actually need the space, but now that you're making more money, you can finally fill all that extra space with stuff you wouldn't ordinarily need.
Yes, lifestyle inflation is the natural tendency for anyone who is human to want more—and it flies in the face of anyone who is committed to practicing prosperity economics.
Prosperity economics, of course, is a financial strategy that emphasizes saving, prioritizing, smart investing, and making the most out of often overlooked financial tools, such as whole life insurance. In short, prosperity economics is about making the most of your money today, tomorrow and every day so that you can live a long, prosperous life today, tomorrow, and every day into the future.
Sadly, most people are hardwired to spend every extra dollar they make—and it can be debilitating.
In college, most people struggle to simply scrape by. There is tuition to pay and books to buy. So people make the most of what they have—older iPhones, beauty products from big-box retailers, and the car Mom and Dad helped them buy in high school.
But then they graduate, get their first job and start earning more money. Almost immediately, most people start sliding down the slippery slope of lifestyle inflation.
All of a sudden, apartments and cars need to be bigger. Maybe that face cream from Walmart isn't as effective as it was during your freshman year, so it gets replaced by one that costs three times as much money. And you have to get the latest iPhone, of course.
A few years and a couple of promotions later and people are buying separate shoes for walking, running, basketball and cross-training. And they're all name brand. Face cream isn't something that's just for the evening anymore—now there's a face cream for the morning, another one for after the evening workout, and yet another for bedtime. Then there's the starter home, the second house, and finally the dream house in the suburbs.
It's all increasingly more expensive, and you buy it all simply because you can finally afford it.
But that's not prosperity economics. No, that's lifestyle inflation. And if you aren't careful, it can leave you tumbling financially and landing hard on an empty bank account. Because in the end, lifestyle inflation always costs you more than prosperity economics.
To understand the true cost of lifestyle inflation, you first have to understand that it is not directly related to the true costs of the products you "have to have."
Sure, insisting on buying a $50 face cream when you could get buy with the $7 cream probably isn't the smartest decision. But the true cost is related to your emotional health, your freedom, and your ability to truly practice prosperity economics by making your money work for you.
Here's a look at three of the most common problems associated with lifestyle inflation:
That's the bad news. The good news is that you can protect yourself from the problems associated with lifestyle inflation and practice prosperity economics—but you have to be cognizant of your decisions.
Here is a look at five ways you can protect yourself from lifestyle inflation and practice prosperity economics:
At the end of the day, you will always have more money in your wallet when the sun goes down if you practice prosperity economics and save, invest and conserve your money rather than spending it on the next great thing.