How to manage lifestyle inflation to keep your long-term goals on track

Like inflation, lifestyle inflation could affect your finances, and you might not be aware of the effects straightaway. Find out how it might impede your ability to reach your goals and some ways to manage it.

Lifestyle inflation refers to the tendency for spending to increase as your income rises. Often, this spending goes on luxuries, which may come to be perceived as essentials as you become accustomed to them.

Lifestyle inflation isn’t automatically bad. Indeed, it’s normal to make changes to your lifestyle as your finances improve. However, it’s important to look at what your additional spending is going on – is it making you happier?

There is also often a tendency to focus on how an increase in income could boost your lifestyle now. Perhaps you’re looking forward to an extra holiday each year, attending fine-dining restaurants, o