5 Ways to Smash Lifestyle Inflation and Accelerate Freedom

Lifestyle inflation, what the heck is that and why do you need to smash it?

Remember your first car. It probably wasn’t the latest model or from the luxury brands, right? You managed to get around in what you had at the time…

But there was that constant desire for something better. We have this unfortunate trait to be seeking the next thing, the upgrade so to speak.

It’s a mindset that can be particularly damaging to your financial dreams.

lifestyle inflationLifestyle inflation is where you increase your spending, and hence lifestyle, whenever you gain an increase in your income.

The most common examples of this curse, that’s what I am calling it now, are holidays, cars and houses.

Lifestyle inflation leads to overspending. You spend money you really can’t afford to supposedly improve or inflate your lifestyle. The result however is more debt, more stress and an extension of time before you can achieve financial freedom.

Now before you call the fun police, I am not suggesting that you can’t have fun when you achieve an increase in your income. What I am trying to show you, is how you can manage these circumstances to enjoy life AND achieve your money dreams.

So how do you smash lifestyle inflation?

5 Ways to Smash Lifestyle Inflation

Here are five ways I have identified that you can use to manage the curse of lifestyle inflation.


Yeah I know I bang on about goals, but they just are that important. Having clear money goals will support you when additional income comes into your life.

Knowing in advance how you will manage your money and having clear specific goals that you are striving to achieve will lead to better choices.

In short, the power of the goals comes from your why which will assist you to smash lifestyle inflation.

For example, setting a vague goal like ‘wanting to live a better life’ opens the door to considering all kinds of options. Buying a new large screen television or financing a holiday might make you feel that your life is getting better, but is it really?

On the other hand, if you set a clear goal like ‘becoming debt-free and sending your kids to college debt free’, you’ll have a better idea of what it will take to reach those goals and how to align your spending.

Suddenly, certain purchases and decisions that might inflate your lifestyle won’t really contribute to your end goal so you can easily make better choices.


Wanting to keep up with the Jones’s is probably the number one factor that leads to lifestyle inflation.

ferrariWhen you think about it, there will always be someone with more than you. It makes no sense to compete for the best and newest of everything, especially when you don’t really need it.

Too often I speak to clients that have large credit card debt brought about by spending on ‘things’ that they couldn’t afford just because their friends or family had them. Think about televisions, clothes, IT equipment, or that personal gym equipment… who uses that stuff anyway?


I have written about this before, in fact I think it is the one thing that guarantees your financial freedom.

In order to spend less than you earn, you need to keep your entire lifestyle simple yet comfortable. With this method, you won’t be spending money just because you can afford to.

Once you start tracking your expenses and sticking to your plan, you’ll be able to use any excess money to go toward your financial goals.

A lot of people think this means curtailing their lifestyle, or stifling any fun. However, life is not fun if you are constantly in fear of the credit card statement, or you are constantly juggling money to meet your expenses.

By having a system that supports your lifestyle, which includes the fun parts, you will actually have more fun and less stress. That’s a win win 🙂


Impulse purchases are the worst kind and can often lead to lifestyle inflation.

Impulse purchases aren’t planned and are made as a result of emotion.

When you make an impulse purchase, you aren’t thinking about your money goals. You end up regretting these purchases, especially as they are likely for things you don’t need or really want.

focusThis is a case of needing to manage your monkey brain…the part of your brain that seeks excitement.

Instead of relying on temporary happiness, take steps to avoid impulse purchases so you don’t get sucked into lifestyle inflation.

I coach clients to replace their credit cards with debit cards so they can only spend the money they have.

The other option for those that can’t get rid of their credit cards is to leave them at home when you go shopping.


Once you have a plan for your money, you can manage increases in your income far more effectively.

You can choose to inflate your lifestyle a little with the extra income, and then apply the majority to accelerating your financial freedom.

Applying your extra income to your wealth generator, either reducing debt or investing, will see you achieve financial freedom much sooner.

You can see the impact of adding even small amounts of money to your investing using my calculator here.

In other words, keep living how you have been when extra money and windfalls come through. A small amount of lifestyle inflation is ok, just be careful. 🙂


So there you have my five tips to help you crush lifestyle inflation. And the good thing is, it none of these tips mean you have to eliminate the fun from your life. In fact, I contend that if you follow these tips and live within your means, you will actually have more fun then you may be having now.

If you want help getting started, let’s get on a call and have a chat about the best solution for you. Click here to schedule a time that works for you.

Have you ever felt tempted to spend more after earning more? What tip will you use to smash lifestyle inflation?