The Art is not in making money but in Keeping it.

Lifestyle inflation is a common trend amongst Millennials. However If you want to build wealth, it’s important to know how to manage money . Unfortunately, many people find themselves living paycheck to paycheck instead of saving for financial freedom.

Lifestyle inflation is considered the main reasons people have difficulty on how to manage money and achieving financial goals. What is lifestyle inflation? Simply put, it’s when your spending increases as you start to earn more.

While lifestyle inflation is expected it can become a problem if it’s not kept in check. When lifestyle inflation goes unchecked, it can lead to a situation where your spending outpaces your income and your savings goals become out of reach.

An image showing a to do list on Lifestyle inflation and how to manage money

There are steps you can take to help you manage money and and avoid lifestyle inflation, even when it seems like you’re just trying to make ends meet. Making small changes in your spending and saving habits can have a big impact on your financial freedom down the road.

So how do you avoid letting lifestyle inflation get out of control and at the same time manage money efficiently.

The first step to avoiding lifestyle inflation is changing your mindset. Instead of thinking of ways to spend your money, start thinking of ways to save and manage money. Be mindful of your spending and make sure that it aligns with your goals and values. Taking the time to do a spending assessment can be very helpful in getting your finances under control.

Where are you spending the most money? What are your biggest expenses? By looking at where you are spending the most money, you can figure out where you can cut back and save some money. Start by creating a budget and sticking to it. Track your income and expenses so you know where your money is going. Then, start setting aside money each month to save for your future, this is where your financial freedom begins.

Investing your money is another great way to manage money and grow wealth. You can start small, with just a few hundred dollars, and invest in a diversified portfolio of stocks and bonds. If you are new to investments, check out this article on 3 Practical Tips for First-Time Investors.

One important thing to look at is your needs vs your wants. When it comes to making purchases, it’s important to differentiate between what you need and what you want. This can help you make more informed financial decisions and avoid excessive lifestyle inflation thereby helping you manage money and gain financial freedom.

For example, do you really need that new car or can you get by with your old one for a few more years? Do you need the latest iPhone or can you make do with an older model?

Making informed decisions about your purchases can help you manage money and avoid lifestyle inflation. So next time you’re about to make a purchase, ask yourself if you really need it or if you can get by without it. By taking the time to assess your needs and wants, you will be on your way to achieving financial freedom as well as aligning your spending with your overall goals.

An image showing the Kalabash App on how to manage money and avoid lifestyle inflation.

There are also many fintech innovators that have solutions that help you manage money better and lead you to financial freedom. Take for example Pay Small Small (PSS) by Kalabash, the perfect solution to inflation-proof your purchases! By locking down current prices with as little as 25% down payment while you spread out the balance in convenient installments. It helps you avoid price increases and inflation altogether.

Lifestyle inflation is something that is very hard to avoid. Especially in this society, where it seems everything is all so readily available and we want it all now. Being able to avoid lifestyle inflation and manage money is a skill that not many people have. It’s in your best interest to develop that skill. Start making smart money moves today so you manage money better and secure your financial freedom.

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