What is Lifestyle Inflation?

It means increased expenses when income rises. Imagine a new job, performance bonus, unusual business profits or simply moving from student life to employment – such instances can spurt Lifestyle Inflation

There are ways to ensure you don’t succumb to Lifestyle Inflation. We have put together most effective ones here.

1. Finish off the loans: Whether an outstanding loan or a hefty credit card bill, it must be cleared at the earliest. Putting money to good use is a lot of satisfaction with the peace of mind as a bonus.
2. Increase investments: The new or additional income should straight make way to investments – you could increase the existing ones or start afresh.
3. Re-invest in business: Money attracts money. You can plough back the profits in business and aim to grow it.
4. Invest in personal development: If you are employed and received a bonus, you should consider investing in yourself. Make an effort to upgrade to new skills which might just help you steam roll your career graph. Learning as they say, is never wasted.
5. Make gradual change: Inflation can be checked if the rise in spending is done in a calculated way.
6. Plan financial freedom: Having the ultimate goal of financial nirvana can set you on a frugal path. It will eliminate all unnecessary expenses and focus on wealth goals. Who knows you could be enjoying early retirement as a windfall.
   
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Mutual Fund investments are subject to market risks, read all scheme related documents carefully.