Lifestyle inflation.

Welcome to the Financial Independence UK podcast! Join your hosts Tom and Alex as they talk about Lifestyle Inflation and how it impacts your FI journey.

Lifestyle inflation can sneak up on you, to define it, your outgoings increase as you earn more money. Most people will earn more over their career, this can lead to higher outgoings due to upgrading your lifestyle with the extra money. A good example of this is mobile phones, the manufacturers release new versions each year and effectively say their old thing is rubbish, you need this new one. Ever wondered why Apple is the most valuable business in the world? Also see; cars on 3 year finance cycles and luxury watches.

Pressure in life can make it very easy to spend all the money you have to feel like you ‘fit’ in.

Delayed gratification can help with making intentional purchases. Allowing a gap before parting with your money you trade hours of your life for will enable clarity as to whether you would really value a purchase rather than it being impulsive.

Lifestyle inflation will keep you forever on the hamster wheel. You get off when you retire or you die.

Tips for combatting lifestyle inflation:

  1. Budget
  2. Assess the net impact of a raise, after tax, NI and expenses
  3. Increase savings
  4. Declutter, assess the need for new things
  5. Think long term, what can this extra money be used for?
  6. Will your future self thank you for your actions?

As always, if you have any questions for the team, feel free to email us at

Links featured in the show:

The Hedonic Treadmill.

Diener, E., Lucas, R. E., & Scollon, C. N. (2006). Beyond the hedonic treadmill: Revising the adaptation theory of well-being.

Financial Independence calculator:

Direct download here.

Piano music for intro and outro licensing:

Heroic Reception by Kevin MacLeod

Ecossaise in E-flat (WoO 86) by Kevin MacLeod

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