When
you get more money per month, it is not unusual to let things go a
little, spend a little more than you used to, or make impulse buys
under the assumption that you deserve it. The problem is that if you
overestimate how far that extra income will go instead of planning
ahead, the money could disappear pretty quickly, leaving you living
outside your means.
The
Millennial generation views finances differently than previous
generations. They aren’t huge savers; they believe in YOLO (you
only live once) and living life large. After all, you never know when
the ride here on earth is going to end. Unfortunately, what they
don’t consider is in the same respect, if you live here a long time
then you will have many years to support yourself.
According
to a credit union Winnipeg financial institution, those entering
the workforce are in jeopardy of being one of the first generations
to pay into the social security system and never get anything out of
it. Not only is this unfair, but it is also making an entire
generation vulnerable to poverty as they age, which is not something
that many 20-somethings think about. If you are working your way up
the corporate ladder, it is important to remember to watch out, so
your lifestyle doesn’t expand more than your income and leave you
cash-poor.
Live within your original means
Lifestyle
inflation is when you spend money in proportion to what you make.
When you get a raise, you raise your standard of living to
accommodate it. For example, if you get more money at work, you go
out and financea car or you find a bigger apartment. It isn’t that you don’t
deserve rewards for your time and effort. It just might be that
things were just fine before you had the additional income, so don’t
try to find more ways to spend it once you do have it.
The
person who will end up with the greatest wealth is the one who gets
more money and stays at the same lifestyle level and begins to save
instead of finding things to spend their money on. The extra income
that you put into your savings or invest will make a huge difference
on your financial security in the future. Your bigger apartment
likely won’t.
Have a safety net
To
stay out of the lifestyle creep it is important to give your money, a
purpose. That means to plan where your finances are going. It is easy
to run the debit card and cross your fingers, but if you take the
time to designate where to put your money and prioritize what is
important, you can take money out of your budget automatically. Then,
you are going to have a safety net if something should fail, and you
won’t be tempted to spend outside of your means or unwittingly put
yourself into a financial bind.
It
is also very important to have a rainy-day fund. YOLO is true, but it
is also true that you can’t predict what is going to happen. That
means that accidents or unanticipated expenses will always be there.
If you don’t have some savings to cover them, you are going to be
financing them. That is a recipe for disaster. You should included in
your financial plan, have a safety net for those things that you
can’t see coming.
Trick yourself
Everyone
tells themselves little lies to help. The best financial thing you
can do is tell yourself a lie about what you have to spend. The best
way to do that is to have money taken out of your paycheck before you
even have your hands on it, by investing in a retirement account or
sending it directly to savings. That way you never have the
opportunity to make excuses or find ways to spend it. In your mind,
it should just not exist.
Lifestyle
creep is something that everyone is prone to. When someone has more
money, it is easy to find ways to spend it. Instead, make a plan to
save, and you will find that your financial future will be much
better and your stress much lower.
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