How Lifestyle Inflation Is Keeping You From Getting Rich

lifestyle-inflation

Rapper Notorious B.I.G. wasn’t lying when he said “mo money, mo problems”.  That because of something called Lifestyle Inflation where your “lifestyle” needs increase as your income increases; thus, keeping you in the same financial situation.  This reality creeps up when people have debt, don’t save, don’t invest.  They don’t keep up with the Joneses, they are the Joneses.  By no means do I believe that one doesn’t deserve nice things.  In fact, I believe no one should have to sacrifice a quality lifestyle because of lack of resources.   A quality lifestyle comes at a price but let’s try to not dig ourselves into a money pit to experience the finer things in life.

CONFESSION OF A  LIFESTYLE INFLATING MILLENNIAL

I remember being at my job out of college and making around an entry level salary. I owned my car outright, had my student loans paid a year in advance, and was on my way to buying my first house. Back then, you couldn’t tell me I wasn’t living a rich life. I wasn’t rich from a financial standpoint but it was the first time where I was “adulting” and was able to fund my lifestyle by myself.  This was a big deal considering a year and a half before that, I was a senior at Spelman College eating pizza at 1:00 am while pulling all-nighters.   As time passed, income changed, and lifestyle needs matured, I found myself “needing” more.  I had to get another car after mine was totaled in an accident but I couldn’t bear the idea of not driving a luxury German car (thanks Dad for that addiction).  I spent money on home decor so I could have a  “magazine ready” home.  I upgraded my wardrobe.  I was making a little money and working with people whose hourly rate was a luxury car note.  I wanted to show my family and friends that I had it all together….that I belonged in my new life.  That all changed when I left a promising career in one field to follow other dreams for another field.  It was in the transition that I started to place a serious effort in saving money and making smarter financial moves.  I had to.  It was my new reality, we were in a recession, and I was no longer constantly surrounded by the Joneses.  I took the time to invest in my own financial literacy so I could better understand how to stretch my money.  This was also around the time she makes cents was born.

BALLIN’ & BROKE

As you vibrate higher so will your expectations of people, experiences,  and things around you. The good thing is there are ways around lifestyle inflation where you can enhance your life without feeling broke. Lifestyle inflation keeps you in a constant state of financial paralysis because your need for “things” is keeping pace with your increasing lifestyle.  That’s how a millennial couple with no kids can feel financially stretched in a $100,000+ income household. Stay tuned as we dive deeper into the topics of lifestyle inflating from a millennial perspective and explore opportunities to elevate your life without the elevated price tag.shemakescents-com-1

{Financial Cents} Are You Broke on Payday?

broke-on-paydayIt’s the weekend baby (or close enough) and for some of you that also means PAYDAY!  A joyous day that, in theory,  represents the culmination of your hard work.  Regardless of your income, this is the day when you get the funds to take care of all the things in your life that need funding.  So what happens when you get paid and you are already broke?  Not broke, as in oh I have a hundred-dollar bill in the back pocket of that pair of skinny jeans, but more like, how I am going to afford the gas to get to work and eat once I’m there?  For some of you this is a baffling predicament to be in and for others, this may very well be your reality.  I know a woman, Carrie*, who just got paid today and is already broke.  Having past due bills is her norm, she is struggling to stay afloat, and her zero balance checking account doesn’t help.  From talking to her, I gathered that she is overwhelmed with her situation, feels alone, and wonders how something that is supposed to represent the culmination of your hard work is worth nothing.  I often find in situations like this that it is very difficult for people to truly see how their actions may have an effect on their current situation.  For those of you that are underpaid that is one thing, but for those of you who overspend, that’s another.  Carrie wants the fab life but refuses to take some necessary steps to get it by overspending on wants and needs.  

Naked, Bossy, & Freaky = Better Money Management! 

Get Financially Naked: Being honest about your financial situation is like being naked in a crowd of strangers.  You can’t fake it until they make in this situation if you are stripped down.  You have to acknowledge that your financial situation represents more than money.  It could be the manifestation of your mental state.  Carrie feels alone and is overwhelmed.  Maybe there is extra baggage/clutter in her life that is cluttering her thoughts and behaviors?  Is this true for you too? Being honest with yourself will help you to recognize the problem so you can begin to create a solution.  Are you complacent in your current job situation?  Is it keeping you from finding your calling or a better income? It is scary and uncomfortable, but if you are serious about getting back on track, it’s time to strip and understand how a change in mindset can help improve your financial situation. 

Get Bossy: Tell Your Money Where to Go.  I believe the reason that people don’t like to hear the word “budget” is because they associate it with “sacrifice”.  I, on the other hand, associate the same word with being financially empowered.  My favorite financial quote comes from John Maxwell who maintains, “a budget is telling your money where to go instead of wondering where it went”.  In one of my earlier posts, How to Make A Budget, I suggested you start by listing your sources of income and then create a list of your monthly Fixed Expenses ( i.e. Mortgage/Rent, Car Payments, Insurance, Emergency Fund) and your Variable Expenses (Utilities, Groceries, Gas, Food, Entertainment).  If your expenses are more than your income, then it is time to make a realistic budget and decide if you would rather make a temporary sacrifice of luxuries say cable or weekly salon visits, or the comfort of knowing that you won’t be broke next pay-day. 

Get Freaky:  Neat freaks are the new cool… think Martha Stewart, not Mommy Dearest.  It’s easy to forget about a bill when you never opened it in the first place, throw it in your purse, or simply ignore it.  I stay organized in a few ways.  For one, I keep a record of all of my service providers and current balance on the due date in the monthly view page of my calendar.  If I need to check on a bill, I look there first.  It is a way to see if my bills are increasing or decreasing and paid for the month.  It also helps me figure out how I can best schedule payment.  I also keep online records to stay organize and paper copies of any bill that requires disputing.  For those documents that need paper copies, I have designated ONE place for them. 

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{Friday Ramble} One Reason He Hasn’t Put A Ring On It!

The Ring Didn’t Mean A Thing!

She Makes CentsI wonder does former Real Housewives of Atlanta, Kim Zolciak, still think that after she got hers two years ago? In fact, he put a ring on it after she stopped living off someone else and started bringing in the big bucks from Bravo. My inspiration for this post, however hits a little closer to home as it comes from a girl talk with a girlfriend of mine…let’s call her “Christine” for anonymity sake. Christine and I were catching up the other day laughing at a prediction gone wrong. You see, at the beginning of last years, either she or I made the prediction that her boyfriend would pop the question in 2012. During our girl talk, she revealed that she asked her boyfriend the money and relationship questions discussed in the post 5 Financial Questions you Should Ask Your Significant Other Today to  open up lines of communication about money and their future as a couple.  Our conversation then led to people who lie about their finances to a significant other.
Sure, like Christine, you and your boyfriend could have talked about marriage, but that doesn’t mean he has been secretly studying up on Tacori, now does it? If being engaged in a certain period was a similar goal and that didn’t happen, let’s examine one major possibility… a.k.a. your financial situation.  While I am very open about my personal financial situation with you (SMC readers), my family, and the Mr., I know that everyone is not so comfortable talking about money. Many people were raised to think that frankly, discussions of money are just plain rude. Although I must agree with financial journalist, Jean Chatzy, who advised in article for the Winter 2013 edition of Martha Stewart Weddings that you should “never STOP talking about money”. People list money as the top reason they fight and they confess hiding financial information from their spouse, but if you are planning on a successful marriage and not just a wedding, then you should be able to talk about anything- especially money!

Things to Consider:

her money piggy bank

Know You Before He Can Know You.  This is the epitome of money and relationship advice.  On the financial side, you can’t share accurate information about your finances, if you don’t know your current situation.  Check your credit score.  Keep track of your debt.  He can’t know your debt until you know it, just like he can’t fully know you until you know yourself.
Argument

Be Open.  You may be fluent in your love language, but how is your financial fluency?  One thing I had to learn with the Mr. is to truly engage in communication you have to be willing to talk as much as you listen.  Give as much as you ask and be prepared to hear things you may not like.  Relationships thrive on open lines of communication.  Again, if you plan on jumping the broom, you have to be ready to talk about everything, including those stupid financial decisions you made in your early 20s that you are still paying for…literally.
Danielle jona's ring

Great Expectations. The 6 carat dream on the .25 carat budget.  I have another friend whose boyfriend told her, he was not proposing to her because he couldn’t afford the rings she was pinning on Pinterest.  Does she really expect a celebrity ring? No. Does her boyfriend have a point?  Yes…well, maybe.  Yes, he has a point because he doesn’t want to disappoint you.  Maybe, because Pinterest is like an online vision board of awesomeness where you group images that you like that lead to articles that you love (follow SMC on Pinterest).  Why not pin pretty things?

slideshow_1002208641_APTOPIX_Serbia_Bridal_Race

Tick Tock, Gotta Beat the Clock.  I’ve heard women say, including myself, that they want to be engaged to be married by [insert date/age here].  For many, the race is more so against the clock than against the Joneses.  How many of you put a similar emphasis on paying off student loans, credit card debt, protecting your investments, or living debt free? Maybe he is not ready. Maybe you both aren’t ready as you think you are. I will say that you need to make sure your ducks are in a row. Wouldn’t it be lovely, when the time comes, to go into a marriage with no financial surprises. In my opinion, that is WAY better than a ring…but that’s just my two cents.

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Budgeting 102- Spending Diet

I saw the movie Eat Pray Love not too long ago. In it, is a reference to an old Catholic joke that I have become very fond of. In a voice-over, Liz, played by Julia Roberts, recalls the following:

I remember an Old Catholic joke about a man who spent his whole life going to a church every day and prayed to the statue of a great saint begging, “please, please, please, let me win the lottery.” Finally the exasperated statue comes to life and looks down at the begging man and says “my son, please, please, please, buy a ticket”.

Sometimes I find myself in situations where I am the one begging and sometimes I am the statue. Today, I come to you as the statue. I once heard it said that we buy what we want and beg for what we need. Is this you? Have you put you financial security at risk with things you wanted and now you are begging for a financial miracle? Be a part of your own miracle…buy a ticket. I am taking the points mentioned in Budgeting 101 step by step. Like dieting and working out, budgeting takes time, restraint, and accountability. I invite you to join me on my Spending Diet.

Write Down Everything You Spend Your Money On. Since April 1, 2011, I have been writing down EVERYTHING I have spent money on. I included this advice in Budgeting 101 with the suggestion to do this for two weeks. I would now like to retract that advice and tell you to extend it for an entire month. Every financial and money management writer will tell you to do this. Honestly, it wasn’t until the beginning of April that I actually did this myself. I thought between my memory and online banking statements, that I had an accurate grasp on how, when, where, and with whom I spent my money. SMC readers, I couldn’t have been more wrong. My spending chart has revealed that I am an emotional spender who blows a great deal of my food budget on eating out with my sister because I believe we don’t see, talk, or interact as frequently as we once did. My spending chart personified aspects by my sometimes-narcissistic personality. I made a donation to my alma mater that I really couldn’t afford, because I didn’t want to be the 5,999 person who comes shy of the 6,000 donor goal for the Founder’s Day scholarship fundraiser. I also learned that while there are aspects of my personality where I am admittedly spoiled, I also spend and give the a great deal of my money to others to make them happy. Hi, my name is Danielle and I am an emotional spender. Buy the ticket. I am putting myself in financial rehab to get back on track like my Rah Tiffany did years ago. I have locked my credit card away and most importantly, I am learning to say no to others. Catey Hill, the author of Shoo Jimmy Choo created a Day to Day Spending Chart that I particularly like. I used Hill’s chart as an example and made one that fits my own financial goals and spending style. Buy what you need and you will not have anything left to beg for. Buy a ticket and let’s start our financial journey together.

If you are interested in my own Spending Chart, please email me at shemakescent@gmail.com
subject: Spending Chart 
 

 

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The Benefits of Teaching Children About Money

 

“I now realize that the greatest power in the world is the power of knowledge” (insert lol here if you already know where I’m going with this). The quote, was something that every student from my elementary school and I had to say at the start of every day. Nevertheless, the quote holds true– there is much power in knowledge and the sooner one understands a concept the better. Yesterday, in The First Piggy Bank, I posed the question: how do you introduce the concept of saving to children?  To take that question a step further, when is the best time to introduce the concept of saving to children? The earlier the better. According to Y!Finance, “the benefits of teaching your children about money early on are both immediate and long-term.” It helps in the development of smart saving habits earlier in life and also teaches discipline and self control. Understanding that just because you want something right now doesn’t mean that you can afford it, will save children and parents in the end. I’m glad I shared the tidbit of my first one hundred pennies because it allowed me to dig deeper into my memory bank of children and saving money. One memory definitely comes to mind. I was in high school and my best friend at the time had a little sister in elementary school. Instead of spending her money on snacks and little kid things, she decided one day that she was going to save her money for a limo. I thought it was extremely funny at the time, but admittedly, I didn’t realize how financially mature she was. The little sister, maybe around 5 years old at the time, decided on a goal and chose to cut her spending to save so she could one day afford her dream car, even if it was a limo. Some adults still haven’t mastered this concept in their endeavor to keep up with the Joneses, but that’s for another post.

While tweeting, I came across a link that directed me back to a site that is becoming a quick favorite of mine and a financial must: www.mint.com. Mint and the Scholastic have teamed up to teach kids the basics of money management. Mint education has figured out a way to make learning about personal finance fun with how to articles to interactive games that guides kids to adults through the ends and outs of money management. Personally, I can’t wait to read More Education, More Problems? The Myth of Grad School.. Teaching kids about saving early will help them to respect your hard-earned money earlier in life. Just remember, adults, it is never too late to learn about personal finance and money management. See The 5 Golden Rings to Your Child’s Financial Success to start the conversation with your child/teen or a child/teen that you care for.

  

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The 5 Golden Rules to Your Child’s Financial Success

  1. Children learn what they see. How can you teach children about the horrors of impulse spending when you are guilty of it yourself? Clean up your act, first. In school, kids are taught the basics: reading, writing, mathematics, and science, rarely are they taught money management. Therefore, as an influential presence in a child’s life, you have the opportunity to shape their thoughts and views regarding personal finance.
  2. Make it fun! If it starts to feel like a school lesson, then you will start to sound like the teacher from Charlie Brown. Several online resources available can make learning more enjoyable. For example, the FREE online video game I played yesterday on Mint’s Education page is both fun and illustrates how smart money decisions equals #winning
  3. Break it down so it is understandable. When I was younger, I couldn’t understand why my mom told me we couldn’t afford a monkey (a pet I was totally obsessed with having), when I saw her simply put her ATM card in the machine and magically receive money back for the things she wanted. Explaining where money comes from is a good place to start in the conversation about money.
  4. Stop reinforcing bad behaviors. Merchants put all the goodies closest to the register for a reason. Not only are all of the goodies close to checkout, they are often strategically placed at a child’s eye level. This sets up the stage for several scenarios that counter-act the concept of smart money management. I worked in retail while in college and I saw kids and parents alike get suckered into buying items they had no intention of buying. I also witnessed, more often than not, the adults who bribed children into good behavior with the promise of a purchase. One way to stop reinforcing bad behavior is to explain that we are going into this store for “xyz” and if a tantrum for an impulse buy comes up, explain that if you want the item, you must save “blank” amount of money…also known as establishing financial goals #5.
  5. Make Financial Goals Together. Want a new bike? Video game? Nail Polish Set? Bracelet? Start saving. Adults if you want a new TV, that cute handbag from the other day, or that iPad 2….start saving. If you save and enjoy it, then they will too. In addition, there is much gratification to be found in accomplishing a goal.
     

    OTHER GREAT RESOURCES

    Mint Education

    KidsHealth

    PBS Parents

    Y! Finance

 

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