Here are some tips to help keep your spending in check as your paycheck grows:
The first step to avoiding lifestyle inflation is to understand exactly where your money is going every month. Break down all your expenses to see if there are areas you can trim back.
Here are some questions to ask yourself:
Once you understand your spending, create a budget to align with your financial priorities. Automate transfers where possible – for example, have a portion of your paycheck automatically sent to a separate savings account every pay day. When you get a raise, have some of the increase added to the auto-transfer amount.
As your income grows, try prioritising financial buffers rather than inflating your lifestyle. Some buffers include:
Talking about money can make people uncomfortable. But avoiding these conversations can make lifestyle inflation silently take root.
Foster open, non-judgmental financial dialogues, especially when your income or expenses increase. Share your goals, priorities and tradeoffs with your spouse, family and/or close friends so you stay aligned.
If you have kids, try discussing financial changes and decisions as a family. Explain your budgeting decisions and why avoiding inflation in certain areas helps the whole family long term.The views shared in this podcast are for general information and educational purposes only and do not constitute financial, investment, legal or tax advice. Listeners should seek independent advice from a qualified professional before making any financial decisions. Emirates NBD Bank PJSC accepts no liability for any loss arising from reliance on the content discussed.