The Lifestyle Creep Index
Parkinson's Law of Finance states: "Expenses will always rise to match income." This is why doctors and lawyers go broke.
You got a raise. You celebrated. You bought a nicer car. You moved to a nicer apartment. Now, despite earning double what you did 5 years ago, your savings account is exactly the same.
This is Lifestyle Creep. Use the audit below to detect if you are building wealth or just burning cash.
The Golden Handcuffs
Lifestyle Creep is dangerous because it is invisible. It happens in $50 increments. A subscription here, a better wine there, "upgrading" to business class.
Suddenly, you need $10,000 a month just to survive. You have lost your freedom. You cannot quit the job you hate because your lifestyle demands the paycheck. You have forged your own Golden Handcuffs.
The 50% Rule
The only way to beat this is the 50% Rule: whenever your income increases, save 50% of the difference and spend the other 50%. This allows you to enjoy life while automatically increasing your savings rate.
Wealth Logic (FAQ)
Is all lifestyle inflation bad?
No. Buying back your time (hiring a cleaner) or investing in health (better food) is good inflation. Buying status symbols (cars/watches) to impress strangers is bad inflation.
How do I reverse lifestyle creep?
You must do a "Financial Fast." Pick one category (Dining Out) and cut it to zero for 30 days. Reset your baseline dopamine levels.
Want to know when you can escape the handcuffs?
>> RUN THE FREEDOM NUMBER CALCULATOR
No comments:
Post a Comment