When you already don’t make a lot of money, living “below your means” feels impossible. Your “means” might barely be able to afford your necessities. When you don’t consistently spend on unnecessary things, cutting random things out “Latte Factor”-style isn’t really going to improve your overall financial picture in a profound way, although it might save you a few bucks here or there.
But in general, there are smaller areas of spending in my own personal life that I see creep up as I become more financially comfortable — and that scares me a little. I know that people talk about lifestyle inflation a lot, usually citing it as the reason they still aren’t saving money despite seeing salary increases during the course of their career. As our salaries go up, we adjust our idea of what “living within our means” is and start spending more accordingly. First, the grocery budget gets a little more lax, then we start saying “yes” to more nights out than we would have when we were really pinching pennies,and before we know it, despite the salary increase, our financial picture hasn’t gotten any better — the savings account is still meager, and every purchase that prevents us from putting money into that account feels necessary now, and even deserved because we worked so hard for it.
Neither my partner nor myself have seen huge salary increases recently, but even when they slowly creep up — even by just $20 a week or $200 a month — we find ourselves justifying a lot more things saying “eh, we can probably afford this,” instead of thinking about what we could be doing with that extra money in a way that takes the bigger picture of our life into account. Additionally, although we haven’t seen the dramatic increase in take-home pay recently, we both know that it is a thing that is going to happen — at least for him — pretty soon (since he will be finished with residency and start getting some Real Pay). Being aware of that means that we’ve had many conversations about exactly what we will do when the time comes.
These four following things are areas where I’ve found myself avoiding lifestyle inflation and saving extra instead of spending more. These are obviously personal preferences — people will always prioritize the things they want and need differently — but for me, these four things are areas where I really save money, and don’t think I’d spend a ton more on (at least not right away) even if I were earning a lot more.
The general rule of thumb in the personal finance world is that you should spend 30% of your income on housing costs. I currently spend less than this — closer to 25% — and my roommate/boyfriend spends even less of his income on housing (since we split our costs evenly, and he earns more than me).
Each year, both of us see our incomes creep up, and with that, we could definitely increase our quality of life by getting a nicer, slightly more expensive apartment (or even thinking about buying a house). However, this year, we actually choose to move into a less expensive apartment. There are just two of us, and one (very small) puppy — we have no need for more space and aren’t home enough right now to feel the need to have anything fancy. We love our cozy apartment; it is well-kept, decorated, clean, and homey. We plan to stay in it for a few years more, at least, even though we know our salaries will continue to increase over that time. Just because we can afford something a little better doesn’t mean we need it, and right now, it is more important to us to save money and live below our means in that area.
This is a huge conversation we’ve had to have in regard to the possibility of “future money.” A year or two from now when we have a good amount more to work with, will we adjust our “means” accordingly, move to a bigger place, and spend more money? Or will we stay in our humble home that is extremely affordable even on our current salaries, throw money at his student loans, then actually start enjoying life and — dare I say — “inflating” a few years down the line? We’ve decided on the latter, at least for now (although we’ll see what really happens when the time comes). We are perfectly comfortable in our small place living below even our current means, and my best guess is that we will feel similarly in two years. When we get a little older, maybe decide to start a family, or possibly add on that golden retriever I’ve always wanted (so not an apartment dog), then we’ll revisit the idea of upgrading our home.
I love gifting — it has been my favorite thing to do since I was very young, and the idea that I’m now an adult with enough money to live on my own makes me feel like the amount I spend gifting things to other people should be slowly rising as my salary does. However, I’ve been on my own for just under a year now — I have had (hugely expensive) emergencies come up during the year, and although I plan ahead and do everything I can to make sure I’m safe and financially comfortable, I sometimes feel like I’m still finding my footing as a financially autonomous adult in the world.
But I get blinded by the fact that I’m doing something nice for someone else when buying a gift, and totally justify buying extravagant things because of it, which is a nice sentiment I guess, but is also totally crazy. The fact that I want to buy a $300 purse for my mom just because I’d love to see the look on her face when she opens it doesn’t mean that I should shove myself into financial ruin — I need to be as discerning with purchases I’m making for others as I am with the purchases I’m making for myself. That means they need to be responsible purchases that the gift-receivers can enjoy, and I can enjoy giving them without sweating as they open it and wondering if I’ll be able to pay my credit card bill in-full this month.
In general, it is nice to give thoughtful gifts to those you love — but expensive doesn’t always equal thoughtful — so I’ve needed to remind myself that to prevent myself from blowing my budget on things for others. Even if I’m in a place where I can comfortably afford extravagant gifts for loved ones someday, I’ll need to remember the very true fact that spending a lot of money on a gift doesn’t make it good. Instead, I should be carefully and thoughtfully purchasing things the recipient will love, and not focusing on the price tag.
To remedy my impulse to spend more than I have on gifts and justify it in the name of Christmas, I’ve had to be meticulous in planning and calculating a proper budget for the holiday season. I want to be able to show everyone in my life that I care about them — and someday, maybe I can do that by gifting them a $60 candle and a Kate Spade wallet — but this year, it might be something more like a basket of cookies and a coffee table book, and that is okay. The people you love don’t want you to go into debt to give them a nice gift.
3. Entertainment/food/going out.
As Drew and I start to see ourselves earning a little more money here and there, we take advantage, mostly by telling ourselves that it is totally okay to go out for dinner tonight because we can afford it. However, when I really think about it, there is no need to be buying a meal out more than once a week, even if we were earning twice as much money as we are now. I love going out and having a good time as much as the next person, but it doesn’t add enough value to my life to go to a restaurant or order takeout on a random Tuesday instead of cook a meal with my already-purchased (and soon to spoil) groceries at home.
Going out is special, and I love it so much that I want to reserve it for special times, and not make it a thing we do on-the-reg just because we feel like we can. Half the fun of getting dressed up to be wined and dined is knowing that you spend most nights eating peanut butter from a jar on your couch, so your nice dinner out feels extra special.
I go back and forth on the thought of this one, but as much as I see the value in traveling and taking vacations, they are not at all a priority for me right now.
It is pretty common for lavish trips to be one of the first few things a person will spend on when they start earning more money and have more disposable income to play around with, but I think this is an area I won’t be desperate to spend on right away, even as my salary increases. I don’t get a huge thrill out of travel, and mostly find myself homesick/stressed about the money I’ve spent to sit in a bar in another state/country instead of sitting in a bar in my own city without spending hundreds of dollars to get there. I think travel is something I will really love one day when I feel more comfortable financially and don’t feel like I’m just getting started in my financial life, but for now, I’m definitely not one of those “travel young!” people, and tend to stay somewhere comfortably in the “wait until you’re older and have more money” camp.
This is obviously a personal decision — people who love travel will prioritize it over other things, and that makes sense for them to do. But since I’m on the fence about it, I don’t see myself shelling out for any extravagant vacations as they become somewhat more affordable to me. I love relaxing and taking time off, but I personally much prefer to do it at home — a vacation isn’t at the top of my to-do list, and even if I had more money, I don’t think it would be for a while.
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