Friend, have you ever felt that the higher your salary, the thinner your savings? Logically, higher income should make us more prosperous, right? But in reality, many of us are trapped in lifestyle inflation.

What is lifestyle inflation?

In simple terms, lifestyle inflation is a condition when expenses go up as income increases. For example, when you were a fresh graduate, you felt enough to eat at a stall, but after increasing your salary, you started to get used to hanging out at fancy cafes every week.

Or what used to be enough with a 3 million cellphone, now feels like you have to upgrade to the latest flagship. Well, so that you don’t go overboard and can still save (even invest), let’s look at some smart tips to avoid lifestyle inflation below.

1. Set Clear Financial Goals

Without clear financial goals, it’s easy to get distracted by consumptive things. Hence, the first step to avoid lifestyle inflation is to set meaningful goals. For example, having an emergency fund of 6x monthly expenses, buying a house at the age of 30, or retiring early at 45.

With goals like that, every financial decision you make will feel more purposeful. You will think twice before buying something that is actually not important. Setting goals gives you a “compass” that guides your spending and financial management.

2. Don’t Get Carried Away by Other People’s Lifestyles

Nowadays, social media can be a very strong trigger for lifestyle inflation. Seeing friends healing in Bali, changing cars, or buying the latest gadgets, sometimes makes us feel like we have to follow suit. In fact, everyone’s financial situation is different, and we don’t know what’s going on behind the scenes. They could be using installments or a long paylater.

You have to focus on your own financial journey. Compare yourself to your old self, not to other people. Lifestyle is not a race, and you don’t need to prove anything to anyone. The financial freedom you build today is far more valuable than the momentary validation of Instagram likes.

3. Improve Your Lifestyle Gradually, Not Instantly

There’s nothing wrong with wanting to live more comfortably after a salary increase. But remember, lifestyle changes should be done gradually, not all at once. If every time your income increases, you immediately increase your lifestyle standards drastically, the effect can be like a balloon that gets bigger quickly, but pops easily.

Try to choose one or two things that really add value to your life. For example, upgrade your residence because you need a comfortable workplace, or buy a new gadget because it supports your work.

But if you upgrade everything at once (food, transportation, entertainment, stuff), it’s not a quality of life improvement, but a lifestyle inflation trap.

4. Evaluate your Financial Plan

A very important way to avoid lifestyle inflation is to always review the financial plan that has been built. This is because financial circumstances change over time. This change is influenced by education costs, rising prices of necessities, and unexpected expenses.

You can do a financial check at least once or twice a year to ensure that the financial plan that has been built is still relevant for this year. When your salary increases, review your financial goals to prevent lifestyle inflation that appears without realizing it.

5. Raise Your Salary? Also Increase Investment

This is one of the main keys to staying financially secure: when income increases, the portion of saving and investment must also increase. Don’t spend all the increase in income directly on consumption. For example, you can start increasing your digital gold investment in Treasury.

The earlier you increase your investment portion, the sooner you will achieve financial freedom. Remember, money saved and invested today will be a “helper” in the future, not just satisfy today’s desires. So, don’t let your lifestyle go up alone, also invite investments to grow together!

A raise is a moment to be grateful for. But don’t let that be the entrance to a consumptive lifestyle that keeps you stuck in a wasteful cycle. Remember, you work hard not only for today’s life, but also for a calm and secure future.’

Increase in salary also increases the investment to avoid lifestyle inflation. Therefore, let’s start investing in digital gold at Treasury.