Earners,

In personal finance, lifestyle inflation is a massive topic. You’ve heard the advice: “Don’t keep up with the Joneses.” It's sage wisdom that still holds true. The emphasis on minimizing lifestyle inflation is vital because it’s a financial trap that catches many.

But there’s a crucial aspect that often goes unmentioned; one that's key to creating a stable, frictionless financial plan. Ignoring this could mean missing out on your best years.

Why Lifestyle Inflation is So Dangerous

Many people care way too much about what others think. It sounds silly, but some still worry about what their high school classmates would think. They accumulate debt and splurge to look successful. Owning nice things isn’t wrong; it's great. But to look successful, you must actually be successful. Many overlook this reality: substance beats appearance.

You’ll always care about others' opinions to some extent. Contrary to social media gurus’ claims, it’s natural to care. The key is to be selective about whose opinions matter. You can’t please everyone, but you can manage a small, meaningful circle. Keeping this circle tight helps reduce consumerism, allowing you to focus on financial stability and future security. This mindfulness curbs the urge to splurge every raise on flashy items, ensuring your financial bottom line improves.

The Paradox of Saving Too Much

Imagine you’ve controlled your spending, and your income surpasses your expenses. The gap between earnings and expenditures widens. If you're like me, your issue isn’t overspending but underspending. You’ve trained yourself to save and invest, possibly to the point of fearing expenditure. You might worry irrationally that spending will lead to financial ruin.

Years ago, I read something that stuck with me: allow your lifestyle to inflate a bit. Enjoy the finer things you’ve worked hard for because you won’t get these years back. The trick is balancing lifestyle inflation with your income. For instance, if you get a 20% raise, allow yourself a 2-3% lifestyle upgrade. Land a new role with a $30,000 pay increase? Spend an extra $1,000 on shopping. Is that so bad? No, as long as substantial savings and investments continue.

This is why we grind. We work long hours to enjoy the fruits of our labor. If you wait until your 50s or 60s, you might lack the energy, stamina, or social circle to truly enjoy your wealth. Enjoy your wealth now AND in the future. Plan wisely to build in both consumption and pleasure, as well as a secure financial future.

Balance is key for fulfillment. Drive a decent car, live in a nice home, and work towards a seven-figure investment portfolio at a young age. Keep this balance, and you’ll undoubtedly live a kick ass life.

Earn more,

Nate