Copy

Enough. Part 3 - Lifestyle Creep

Part three of our series on Enough. If you missed the previous ones, you can read Part 1 and Part 2

Quick recap: 
Money should be a means, but it has this sneaky habit of becoming a meaning
One way to keep it as a means is by assigning specific dollars for specific jobs

Something that is almost universal in the United States is something called Lifestyle Creep. There are plenty of interesting research articles on it, but the general idea is that we inflate our own expenses as our income increases. This oftentimes isn't a conscious decision - it just happens without us even realizing it.

This makes “Enough” an even more slippery and elusive idea to define. 

We buy larger homes, drive nicer cars, and go on more expensive vacations. 

We spend more on clothing, food, drinks, and hobbies. 

The arbitrarily-assigned dollar amount that used to give us pause before a purchase increases. 

This increase in expenses isn't of itself necessarily bad, but it becomes dangerous when money starts its metamorphosis from Means to Meaning. Are these new things and activities still tools, or are they becoming status symbols for us? The question is impossible to answer for anyone else other than yourself. 

How do we go about proactively stopping - or at least limiting - lifestyle creep?

Well, for one we should be measuring our income and expenses. At the very least annually, and ideally much more frequently than that, we should be doing some rudimentary exercise to measure (and even better, proactively plan) where our dollars are going. 

I’m a huge fan and personal user of YNAB - which aptly stands for You Need A Budget. But I’m less concerned with the specific tool than I am with families actually using and implementing a system that works for them.

Once you have the data, you can compare the results year over year and see if those initial jobs that we assigned to our dollars are still doing their work, or if they’ve gotten a bit lax. 

A particularly useful exercise is comparing the year-over-year data next to each other, and comparing it with your values as a family. As your income increased, what did the percentage of your income go towards? Were there certain areas that came as a surprise to you? Are there certain areas that seem overly indulgent?

Again: an increase in our expensenses isn't inherently wrong, but it should be a proactive and not a reactive result. One way we can go about defining Enough is to be aware of this threat called Lifestyle Creep. 

 

Interesting Resources

Hand-raising in Church
3 min view | Tim Hawkins (YouTube)
Just a reminder - I'm on vacation this week (see below for documentation), so I didn't consume a ton of finance-related material intentionally. However, I did come across this. Which I personally laughed until I had tears in my eye and cramps in my stomach. 
Back in the saddle this weekend, so feel free to let those replies come at me this week with your own thoughts on Lifestyle Creep. Have you seen it in your life? Have you seen it in others? What are some ways that you've personally seen effective in counteracting it? 

Talk soon. 

Gratefully,
Copyright © 2020, Fident Financial, LLC. All rights reserved.

Phone: 717-208-2235
Web: www.fidentfinancial.com

Not for you?  No worries - update your preferences or unsubscribe below. 
I only want to be in your inbox if you want me to be.
No hard feelings. I promise. 
 
Fident Financial, LLC (FFL) is a registered investment advisor offering services in the state of PA and in other jurisdictions where exempted.  Opinions expressed in this email are solely those of FFL, unless otherwise specifically cited.  Material presented is believed to be from reliable sources but no representations are made by FFL as to another parties' information accuracy or completeness.






This email was sent to <<Email Address>>
why did I get this?    unsubscribe from this list    update subscription preferences
Fident Financial · 1 Thunder Ln · Lancaster, PA 17602 · USA

Email Marketing Powered by Mailchimp