What is lifestyle deflation? How can you use lifestyle deflation to boost your finances and your life? You will learn it all here!
We are often talking about lifestyle inflation – people spending more money throughout their lives. Lifestyle creep is something to be aware of when you’re working towards financial independence. Lifestyle inflation can lead to you living paycheck to paycheck or getting into debt despite earning more money each month.
So let’s talk about the opposite – lifestyle deflation? It is basically the idea that people want to decrease the amount of money they spend every month compared to their income. This can be forced or it can be a choice.
For example, there are scary money statistics about 67% of Americans not being able to cover a $1000 emergency. When they are living paycheck to paycheck and something happens, they need to participate in lifestyle deflation.
Besides people being forced to deflate their lifestyle, there are people who choose to cut their lifestyle and spend less money every month. They choose to cut their cable or save half their income because they want to.
Many people experience spending less as something negative. Aren’t you supposed to earn more money to finance your higher standard of living? If you want to be financially different from the herd, you have to act different financially. Meaning that you are able to deflate your lifestyle throughout your life at different moments.
Lifestyle Deflation To Boost Your Finances And Your Life
Lifestyle inflation is incredibly easy and it is done without noticing it. You start to earn more money throughout life and you buy a new car. You get a promotion and you go out to eat one extra time each week.
Lifestyle inflation is continuously upgrading things because of our income increases.
The challenge is actually seeing that we are inflating our lifestyle and reversing that. It is hard to decide to consciously downgrade things – get a cheaper car or cut back on eating out.
However, when you gather the courage to reflect on your spending, the benefits can be huge!
- Learn more about yourself
- Improve your relationships
- Boost your bank balance
- Improve your health
- Increase your focus
- Help the environment
How To Deflate Your Lifestyle
If you are committed to deflating your lifestyle, you will succeed for sure. It will take effort but it will be worth it!
Throughout different points in my life, natural deflation occurred. For example, when I graduated from college or when I discovered financial independence.
Basically, lifestyle deflation is lowering your expenses to maximize the amount you can save and invest per month.
Let’s get to the details of how to deflate your lifestyle!
Track Your Expenses
If you want to change your life around financially, you should know exactly what you’re spending.
Write down the expenses that you’re doing day to day. This will be a great way to get insight into what you’re spending your money on and where you are spending too much money without noticing.
Tracking your expenses can also show you how much your lifestyle is inflating. Perhaps you feel like you’re spending a lot of money but your lifestyle is actually deflating. Everything is possible!
Make A Budget
When you want to take charge of your financial life, you need to start a budget. Budgeting will show you where your money goes, what you spend it on, and where you need to adjust.
It can be hard to start a budget at first but make sure you stick to your budget and it will be worth it.
The first few months of budgeting can be a little daunting to stick to your spending plan, but over the months you will get used to it and it will be a great way to lifestyle deflation.
When you notice that budgeting is not for you and you don’t enjoy it, try paying yourself first. This means that you’re first transferring whatever money you want to save and invest. After that, you can spend the rest of your money however you want.
Paying yourself first works great when you are flexible about what you want to spend your money on. It will allow you to reach your goals of lifestyle deflation fast!
Lower Your Costs
When you’ve tracked your expenses and made a budget, it is time to actually lower your costs. Look for places with a major impact on your spending and start there. Things like housing, cars, eating out, and groceries.
You can do things like:
- Live in a smaller apartment – for example, I lived with roommates until last month
- Save money on your groceries
- Downgrade your car – can you work with a cheaper version?
- Save money on your utilities
Declutter For Happiness
In order to keep to your lifestyle deflation life, consider this: stuff does not make you happy.
What will make you happy?
Getting rid of things you don’t need, selling them, and getting money for them.
I moved four times over the last two years. I decluttered every time that I moved and every time there was more stuff to thor out or sell.
Most people are really accumulating stuff over the years, it is taking up space and we are not doing anything with it.
All In All – Lifestyle Deflation
Lifestyle deflation can boost your finances and your life. You don’t need to be a minimalist or sell all your belongings and go live out of a backpack – just be sure that you are only having things in your life that serve you.
When you want to deflate your lifestyle you can start by tracking your spending, making a budget, lowering your expenses permanently, and decluttering for happiness.
Do you have experience with lifestyle deflation? Share your story below!
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Founder of Spark Nomad, Radical FIRE, Journalist
- Expertise: Personal finance and travel content
- Education: Bachelor of Economics at Radboud University, Master in Finance at Radboud University, Minor in Economics at Chapman University.
- Over 200 articles, essays, and short stories published across the web.
Experience: Marjolein Dilven is a journalist and founder of Spark Nomad, a travel platform, and Radical FIRE, a personal finance platform. Marjolein has a finance and economics background with a master’s in Finance. She has quit her job to travel the world, documenting her travels on Spark Nomad to help people plan their travels. Marjolein Dilven has written for publications like MSN, Associated Press, CNBC, Town News syndicate, and more.