As millennials salaries rise as they progress in their careers, a feeling of financial stability doesn’t always follow. For many lifestyle creep can cause them to still be living paycheck to paycheck despite even doubling their salary. Brian Madgett, head of consumer education at New York Life, discussed the problems of lifestyle creep in a recent Millenial Money column in the Associated Press.
“People who see their income increase, a lot of times they’re just not that much better off…Because as your income changes, you give yourself permission to spend more money.” - Brian Madgett
Increases in consumer debt often follow increases in income because the increased salary gives someone the confidence to say “ We don’t have the money in the bank right now, but we’re confident that over time, we can pay that off.” Madgett says.
1) Count your money:
When you’re broke, you keep a close eye on every dollar. But that vigilance can fade when you have some cash to spare. Follow where your money’s going with a financial app or a spreadsheet.
2)Plan for indulgences:
Make treating yourself something special and plan for it, carving room in your budget for fun.
3) Keep pace with savings:
As your income increases, so should your savings. As your salary goes up, so should your contributions to retirement, savings, and emergency funds.
4) Ignore all the Joneses:
Don’t get lured into other people’s lifestyles, stay true to the financial goals you’ve set for yourself.
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