How to avoid “Lifestyle Creep” – Pocketful of Dirhams

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Consider the following: You just got a promotion and a raise at work. But what are you going to do for this extra money? Will you save it – or will you spend it? For some, saving is the obvious route because they are happy to be able to live on their old salary within their means and whatever comes along is a bonus to secure their financial future.

But for many others the temptation is too great and they see the extra money as an excuse to pay for things they could not previously afford. Examples could be taking out a loan to buy a fancy new car that you don’t need or upgrading to a bigger, more expensive apartment.

This is known as lifestyle creep – or lifestyle inflation. As the phrase suggests, it can sneak in on you before you realize you are beyond your means and in need of steadily increasing promotions and raise just to keep up with your growing financial responsibilities.

But how do you avoid lifestyle stealth and keep your financial goals on track?

Hostess Felicity Glover is accompanied by Carol Glynn, founder of Conscious Finance Coaching, who shares her advice on the best ways to prevent lifestyle inflation.

Listen to last week’s episode on the pros and cons of living cashless: