An Essential Wealth-Building Tip for Your 30s: Avoid Lifestyle Inflation. Here’s How.

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In your 30s, you might be more established in your career than you were in your 20s. You might be advancing in your field, getting raises and promotions. Or maybe you’re more established in the business you started and now it’s bringing in more regular income. All of this means more money for you. And that should be a good thing.

Except when lifestyle inflation enters the picture.

Here’s how it works. You get a raise at work. That means more money. Now you can move into a nicer apartment, and so you do. But that means the rent is also higher. And so, the amount of money you have leftover at the end of the month looks the same—if there is any leftover. And you wonder why.

Or maybe you saw that your neighbor just got a new car, and now you feel like the one you’ve had for five years (or less) is starting to look outdated. And so you buy a new car. But that means more debt. And this is on top of the exorbitant-interest credit card debt that’s piling up because you had to go on a shopping spree to buy new clothes to match your new car.

All these expenses mean you’re spending money on non-essentials and not saving and investing in a way that can allow you to build wealth or become financially free. Instead, you end up living paycheck-to-paycheck, relying on a job that may not even be fun or fulfilling for you. But it allows you to maintain this lifestyle, and so you stay. This is what can lead to the lifestyle inflation trap, and it can seem impossible to get out of.

The thing is, if you’re spending everything you make or even more than you make, it will be very hard for you to build wealth because saving and investing is where wealth is built. I talk about that more here as the second principle of wealth-building.

So, if you’re someone in your 30s who struggles to avoid lifestyle inflation (also called lifestyle creep), here are a few tips that might help.

5 Tips to Help People in Their 30s Avoid Lifestyle Inflation

Tip #1: Get clear on what actually makes you happy.

It can be very easy to think that buying fancy or expensive things might make you happy. While there’s nothing wrong with buying fancy things, you really should only do so if you feel that those things will add to your happiness and if they fit comfortably in your budget (see tip #2).

If you don’t actually care about having a fancy car, for instance, you don’t have to buy a fancy car. Even if all your neighbors have a fancy car or constantly upgrade theirs, you can buy a more modest car that suits your taste. And you can keep it as long as you want to. You don’t have to change cars every few years.

Or maybe you want to occasionally buy expensive things in one category but not others. For instance, maybe you do like fancy cars and so you have one. But you don’t care so much about your fashion, and so you keep that modest. Or maybe you opt to buy less house or a cheaper apartment than what you can afford because you understand that the love that’s there is more important than impressing other people by buying things you don’t really care about.

So, before you make another purchase, large or small, you might want to take time to think about your values and consider what really makes you happy. Ask yourself questions like, “Am I buying this because I want it or because I want to impress someone else?” and “Will this add to my happiness?”

Tip #2: Have a budget.

People may be reluctant to use a budget. They may feel like, as long as they have the money, they should be able to spend it the way they want to. But it’s way too easy to start spending above your means when you don’t have a budget, or at least a good idea of how much money you have coming in and how much you have going out.

This is especially true if you’re not naturally a frugal person or if you find yourself too easily giving into the desire to buy things because you can or because you think it’s what others expect of you. (I’m talking to the people-pleasers out there.)

When budgeting, try to look for strategies that help you manage your money in such a way that you have enough for what you need, some things you want to enjoy now, and what you want to set aside in the form of savings, investments, and paying back debt. And feel free to experiment with different strategies until you find one that suits your personality, lifestyle, and spending habits.

Tip #3: Surround yourself with people who care more about your innate worth than your net worth.

If the people you’re surrounded by are more focused on how you look, what you have, and what you can buy than on who you are as a person, you would be better off finding some new people to spend time with. Being around people like that will only feed your desire to do things and buy things that will impress them.

I could just tell you not to care what other people think, which is definitely something you should consider doing. But it’s human nature to care what those around us think. That’s why it’s good to surround yourself with people who share your values, not people who make you feel bad or inferior if you don’t buy designer clothes or the newest technology gadget.

The main thing is, you want to be around people who make you feel good. You should feel energized, uplifted, or inspired after spending time with them. If you feel bored, drained, or like you need to pull out your credit card after being with them, these might not be the best people for you to surround yourself with.

Tip #4: Set clear financial goals.

It’s very easy to let lifestyle inflation creep up on you when you don’t have clear financial goals you’re striving for. In your 20s, you may not have even considered setting financial goals for yourself, like paying off credit card or student loan debt, becoming financially free, or building wealth, whatever that looks like for you.

When you have these goals in mind, it can be easier to remind yourself of things like not to splurge when you go to the store and to avoid impulse buys. It can also be easier to remind yourself that you don’t need to move to a fancier apartment or buy a bigger house just because you can. You’re being mindful of how you’re spending so you have money set aside for saving, debt repayment, and investing for the future.

Tip #5: Remember where your true worth comes from.

If no one has ever told you this before, let me be the first. Your innate value isn’t tied to how much money you have or all the fancy things you own. Your value comes from the fact that you exist. Your existence gives you your value.

Fancy or expensive things can be nice. And it can also be nice to have a higher income if you manage your money wisely. But none of this has anything to do with your inherent value. That’s there no matter what, and it never changes.

So, whether you live in a mansion or a cottage, whether you’re wearing designer clothes or modest attire, your value stays the same. Remembering that can help you stop yourself from connecting your financial situation to your true worth, which can in turn help keep you from feeling the need to display your money through your lifestyle choices.

Final Thoughts

If you’re in your 30s and you’ve found lifestyle creep invading your life, I hope these tips help you better understand how to avoid it. By getting clear on what actually makes you happy, creating and sticking to a budget, spending time with uplifting people, setting clear financial goals, and remembering where your true value lies, you can avoid the lifestyle inflation trap and start doing what’s necessary to manage your finances better and become financially free.

~ Ashley C.

P.S. One of the big things that can contribute to your spending habits is your money mindset—the way you think about money and your beliefs and attitudes toward it. If you feel like your money mindset is keeping you from managing your money well or building wealth, I offer money mindset coaching services you might be interested in. Simply click here to learn more.

Note: The advice presented here is for informational purposes only. If you’re in need of professional financial advice, please see a qualified professional.