Lifestyle Inflation – What To Consider Before Telling Yourself Yes

Let me begin by getting one thing straight – I am decidedly not against lifestyle inflation. A few years ago, I wrote about why I’m actually a fan of upgrading your lifestyle a little bit every now and then. And just a few months ago, I posted about my plan to indulge in a little bit of lifestyle inflation by trading in my iPhone 4 for the new iPhone 5.

But sometimes, people take lifestyle inflation to extremes. We’ve all met them – the coworker who gets a modest raise and shows up for work the next Monday driving a new sports car; the friend who buys every new gadget the instant it comes out, whether he needs it or not; the neighbors who move from your moderately-priced neighborhood into a fancy new house in a feeble attempt to keep up with the Joneses.

Lifestyle creep is tempting – who doesn’t want the biggest, the best, the newest? And while living below your means can feel restrictive, blowing your hard earned cash on things you don’t need can be just as painful. That’s why I’ve come up with five questions to ask yourself before making the upgrade.

#1: What’s My Motivation?

Before you head to the store to buy the latest, greatest whatever, you need to understand why you feel compelled to make the purchase. Maybe your kid smeared permanent market all over your only sport coat, making a stain so big even the dry cleaner can’t remove it; that’s a viable reason to buy a new one. But maybe you want a new big screen just because your best friend/neighbor/college roommate has one. That’s the kind of motivation that leads to buyer’s remorse.

#2: Have I Done The Research?

Whether you’re buying a new car or taking a vacation, you need to do the research before you make the purchase. You’ll want to make sure whatever you’re buying is a quality product, that it has the features you’re looking for, and that it’s at a fair price. Look for reliable product reviews, not simply opinions from your friends. Just as misery loves company, people who have already succumbed to lifestyle inflation usually like to have a partner in crime too.

#3: What Am I Going To Do With My Old ____?

When I decided to upgrade to the iPhone 5, I started searching for ways to get rid of my old iPhone 4. Just giving it away wasn’t an option; I wanted to make a little money off the deal. You should always have a plan to discard of your old things – whether that’s selling them, donating them (for a tax write off, if possible), or lending them to a friend. The only unacceptable answer? Leaving your old gadgets or cars around to collect dust – and lose value – when someone else could find a use for them.

#4: How Am I Going To Pay For This?

Paying for your new wardrobe on credit (because you have to, not because you want the cash back rewards on your credit card)? That’s probably a sign you shouldn’t be buying it at all. Living below your means requires that you don’t pay for things you can’t afford. If you have the cash already set aside for the purchase – and can make it without affecting your monthly budget, your emergency fund, or your investments – then you’re probably in the clear.

#5: Can I Hold Off On This Purchase?

Sometimes, holding off on a major purchase will answer a lot of the above questions for you. But there are other reasons to hold off, too. Big screen TVs usually go on sale just before the Super Bowl – so if you decide you must have a new one, waiting a few months could lessen the damage to your bottom line. Holding off may also make you realize that something you thought you needed isn’t all that crucial after all.

Readers, what steps do you take to combat lifestyle creep?

10 Responses to Lifestyle Inflation – What To Consider Before Telling Yourself Yes

  1. I rarely never buy myself anything new. Ever since I got my first iphone I have been watching to get the newest ones though. How I solved the problem with the iPhone5 was that my plan wasn’t up for an upgrade until next June and it’s not worth $500+ :-)

  2. Wise advice. It’s a constant struggle to maintain a clear distinction between need and want. The advertisers are telling us that we need need need. We need a constant reminder to ourselves that we have have have in abundance.

  3. I just ask myself why I really want the thing I’m looking at and most of the time I can’t come up with a good reason and that deters me.

  4. krantcents says:

    In my former profession, I would bank 50% of any increase before I would spend it. As a teacher, I have not received a raise in at least a few years. I guess I should count myself lucky that I still have a job.

  5. Set new goals, and each time one is reached, allow for a “want” — helps keep me in line!

  6. Emily @ evolvingPF says:

    Your #1 is definitely a great question – appropriate for a variety of decisions!

  7. Occasionally, I when a new electronic gadget comes out, I get tempted to purchase that product right away. I think I get the urge to buy these new gadgets by watching too many ads online. But before I buy anything, I ask myself – do if I really need this product, or do I just want it? If I feel that I do not have the urgent need for that product, they I don’t buy it.

  8. Parvinder@Readtoawake says:

    Nowadays I’m not looking at flyers because there is always something new to buy. Technology changes every 6 months, so before buy I think twice if I want or I need ?

    These two questions help me lot to save money on useless things.

  9. JMK says:

    I’m now unclear about what is meant by lifestyle inflation. I always understood it to mean a longterm/permanent increase to the budget after something like a new job or salary increase. A lot of what’s covered above are one time special purchases, with no additional ongoing financial commitment. If the new electronic device requires a longterm service contract then yes I’d include it, but a new phone on the same plan? No that’s a one time purchase. I larger home is definitely lifestyle creep and means a longterm commitment to higher mortgage payments, utilities, insurance, maintenance and likely new furnishings to fill the extra space. Purchasing the home is not just a one time event, it comes with a whole lot of additional costs that are now part of the regular budget going forward.
    I recently received a salary increase which after taxes amounted to $150 more every two weeks. I increased our mortgage payment by $100 every two weeks, and the other $100 will cover the $90 monthly bus pass I forgot to plan for starting in September for my son’s new school. There is nothing we were waiting to purchase and our needs hadn’t changed from the day before the increase. We are however focused on paying off the mortgage asap so we can retire early, so applying all additional funds there will always be the priority. If there had been some treat we’d been waiting to indulge in, I’d have bought that with the first week(s) of the increase and then adjusted the mortgage payments once that was done.

  10. Kevin Mzansi says:

    A solid list of questions to ask. I would say that #5 is normally enough to stop me in my tracks. I often end up forgetting that I was so enthusiastic about getting the item in the first place.