The Danger of Lifestyle Inflation

What is Lifestyle Inflation?

Lifestyle inflation is common as a person advances through their career. Lifestyle inflation is when the money you have to spend after paying all your bills for necessities increases as your income increases. In other words, you have more money left over after you pay the mortgage or rent, make your car payment, buy groceries, pay your utility bills and such.

As you earn more money, you have more money to buy the things and services you want that you could not buy when you were earning less. This could be a boat or motorcycle, a foreign vacation, a new wardrobe or taking an exotic cruise.

Lifestyle inflation can put you behind the 8-ball for the rest of your life if you allow it. It will prevent you from getting out of debt, saving for retirement, paying for college for your kids or being able to…