Register Now

Login

Lost Password

Lost your password? Please enter your email address. You will receive a link and will create a new password via email.

What lifestyle inflation looks like

Question

I’m one of those people has always budgeted, saved, and worked on increasing my income over time. I bring my lunch, don’t own a car, and get a lot of entertainment from library books, so I assumed my lifestyle inflation was pretty minimal. Recently, though I put together my spending trends since 2011 (first full year post-grad school), and was surprised to find that I actually have a fair amount of lifestyle inflation, it just doesn’t look like I expected.

[My spending over time](https://imgur.com/u0FZYrE)

Note: For tax reasons charity spending is especially high in 2017/2018 due to front-loading donations, but it will likely be similar to the 2016/2019 levels most years, which is still a substantial increase from 2011.

What lifestyle inflation is (for me):

* **Housing**: Housing cost increases are insidious! Rent/housing went from 16.2% of my spending to 39.1% last year. While I have moved to progressively higher cost of living cities, my standard of living has also increased, going from renting a studio in a somewhat sketchy area to owning a 2 bed condo in a nice/central area. This something I barely realized as the upgrades in housing always came with a move to a new city or combining households with my partner.
* **Moving**: Moving is expensive, even outside of moving expenses and/or closing costs. Moving correlated to increased spending on shopping as each new place unexpectedly requires some new things, like rugs for those hardwood floors, shelves to fit that nook, cleaning supplies for the glass shower door, or even wardrobe changes for a new environment/job.
* **Travel, Gifts, and Charity**: Once I paid off student loans, I began to justify more spending on travel (originally 4.4% of spend, increasing to 18.4% in 2015), gifts (2.9% to a max of 9.6%), and charity (from 1% to \~10% of spend ongoing). In my mind, I was making up for lost time and repaying kindnesses. Once I got used to fancy vacations or being able to spoil my family and friends, it became really hard to cut back – a less-nice vacation just wouldn’t be as fun or my gifts might not live up to my niece and nephew’s expectations.

What lifestyle inflation isn’t (for me):

* **Restaurants, groceries, general shopping, or personal care**: Budgeting often focuses on the small stuff. When I’m looking to make cuts, I tend to cut eating out or shopping, buy cheaper groceries, or wait longer between haircuts. Doing these things makes me feel like I’m “being good” and “suffering” a little bit, but ultimately those categories are ultimately pretty small and cuts barely move the needle, while being painfully noticeable.
* **Entertainment**: Being single and actively dating was a bit more expensive, but small compared to how housing can increase. At my most active in 2013, 16% of my spending was on entertainment, restaurants, and alcohol, which was less than twice the (dollar) amount I usually spend.
* **Transportation**: Urban living without a car can make transportation very cheap. The slight upside to my high housing costs is the ability to live without a car, which cut my transportation costs from \~$3,700 (with a paid-off car) to less than $300 last year.

Now that I know my lifestyle inflation drivers, I can hopefully control my increases a little better going forward.

Answers

Someone answered:

There really isn't much lifestyle inflation here at all. Maybe this graph just isn't super easy to comprehend for this data since it combines bigger need expenses with smaller optional expenses. Overall I'd say you had pretty minimal lifestyle inflation, at least compared to the normal

Other than the increase in charitable donations (which I wouldn't even call lifestyle inflation), everything is pretty flat over the course of the graph. 2015 looks like it has a slightly more expensive travel/vacation category that went back down, presumably due to a few events. Housing was flat for the vast majority of the time except last year which you've understandably described. Entertainment, food, gifts, travel, shopping all seem pretty even other than having to furnish your new place.

Interesting data nonetheless.

Someone answered:

It would be interesting to plot them as a percentage of income.

Someone answered:

Am I reading correctly that you spent over 25k on charity a few years?