Ever looked at your bank account balance and wondered where all your money is going? If so you may have fallen victim to lifestyle inflation.
What is lifestyle inflation I hear you ask? It’s increasing your spending as your income rises. Like boiling a frog the change is gradual so it can easily go unnoticed until it’s too late.
One of the key drivers of lifestyle inflation is “keeping up with the Jones'”. This is when people begin to spend more money on items such as cars, boats or luxury holidays because those around them are doing it.
The people around you are likely to be spending a large majority of their income or are accruing debt to maintain that lifestyle. Australian household debt is among the highest in the world at 200% disposable income.