3 Practical Ways to Avoid Lifestyle Inflation When You Get a Raise

We’ve had some great upswings in our financial circumstances in the past few months. My husband left a job for one that paid much better, and I’ve been working to automate my income as much as possible so I can focus less on selling and more on just creating content that I love. This has lead to us increasing our income pretty significantly. Knowing that in the past we’ve allowed things like this to become a problem, and we let lifestyle inflation creep in, we wanted to be proactive and to 

1. “Absorb” the extra with automatic deposit

Ian’s new direct deposit is great, because we can divide up his income between multiple accounts. Instead of everything going into our main checking, only 90% goes into our main checking for doing things like paying bill and 10% into our emergency savings

For my business income, I have some income streams deposited directly into three places:

  1. Basic checking for paying expenses including my salary – which also has an attached savings account for holding my quarterly tax payments
  2. Retained earnings – basically my business’s emergency fund, with a few months’ worth of expenses that hang out there, so if I have a slow month it’s no big deal. When this fund has extra money in it, I use it for investments I like to make, like courses, services, or other resources.
  3. Personal savings – I don’t like to have to think about saving money, so I have some of my income get deposited straight into savings, so it’s painless for me to save money without having to make the effort to take it out of my “salary” – technically for tax purposes this is all the same money as my own income, but for the purposes of how I organize my money, it’s different which is why I mentioned it.

I love this system because it means that if I have a really good month with one income stream or another, I just leave it as is. I don’t like to overthink handling money, I’d rather setup a system one time and be done with it, possibly tinkering it as I need to. 

My automatic systems are designed to ebb and flow, because that’s the nature of business, but when I notice I have a lot more going into one place (like my retained earnings, for example) then I can take a look at which income streams I have going there, and see what I can change around to make it fit my goals more. To put it in perspective, I only do that 1-2 times a year and it takes less than an hour to do. Simple and easy is my favorite thing when it comes to money management.

2. Turn up automatic small-time investments

I talk about it a lot, but I really love using Acorns for our investing. Whenever we have an increase in income, I like to do a spending audit at the same time. I go over anything that’s recurring in our finances and see if there are things there that don’t fit our lifestyle goals. But, instead of just being a frugalista and “just saving money” (because I like spending money a lot and the frugal lifestyle just isn’t for me!) I always try to find a place for that money to go to work. 

Whenever I have a small bill like Hulu that I cancel, instead of absorbing the money back into our budget, I add that amount to the flat rate we “pay” to Acorns every month. We’re already used to paying the bill and we won’t miss the money, it’s an easy hack for increasing our investing without feeling like I’m doing anything. 

3. Make sustainable lifestyle purchases

 One of the most beautiful things about embracing my own kind of minimalism is that it’s not about never buying things, or avoiding stuff altogether. It’s about buying the right things. When we have an upswing in our finances, I used to look at the conveniences that I could buy to make things feel nicer and more enjoyable. Now, I look at everything we spend as an investment. While I still love going out to eat, I am more likely to invest in things these days that help make our budget more sustainable. Here are some of the swaps or purchases I’ve made, as an example:

  • Reusable cloth wipes to go with out cloth diapering – saving us around $90 in the first year of their purchase, even when I bought the fancy name brand instead of a more frugal brand. (I liked the colors of the Bum Genius wipes, so I got them!)
  • Needles to go with my serger, which  turned into several projects that saved money:
    • Cloth napkins (we had some, but I wanted more)
    • Turning old work out bamboo diaper inserts into cloth diapering wipes for free. I’d already bought the BumGenius ones, but these were thicker, and the inserts weren’t good for absorbing diaper messes after being used on 2 kids. Decluttering something rather than tossing it out plus making them into usable household items! Double duty! 
  • Canning jars – I’ve been canning a lot of items in an effort to keep down our food waste, so even when I don’t have to have them, I pick up a flat here and there to have on hand. That way, when we have extra garden produce it’s easy to make a batch of something because I always have the supplies necessary. Saves money in the long run, and means more healthy food for us that’s almost as easy as takeout.
  • Multi-use jar tops – one of the ways I like to go zero waste is to use my glass jars more, and use disposable plastics less. So, in an effort to make that work, I got some silicone lids to go onto my glass jars. That way I don’t have to use my canning lids, and they can be used again and again. 

These are some easy things that worked for us and our lifestyle, none of them are things I’m saying everyone has to do. That’s just silly. But, maybe some of those things will give you an idea of what you can do. For me, it’s all about making reasonable purchases that I can recoup the cost of within a year or less – or they make our lifestyle so much better that that increased cost is worth it to me. For example, one of the things I’m saving up for is a washer and dryer combo like this one, so I can save a step in my laundry process every day, and have a special program for my cloth diapers so everyone can easily wash them, not just me since it’s a bit of a complicated process. Since we want to replace our washer and dryer soon anyway, it’s definitely on the list of things that would be a huge time saver for me and would be a worthy investment into our lifestyle. 

When you’re increasing your income, avoiding lifestyle inflation is mostly about consciously looking at how you want to spend your money, and what you want your future to look like. For me, that means focusing on financial ease through always having enough money to do what we want and need – so savings and investments become a no-brainer top priority. When we were in debt, that was the top priority so we could limit our financial liability and have a more secure financial future. 

If you’re looking at a raise, what do you do to keep your lifestyle creeping up and absorbing the new income?


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