And when you get that first job with the decent salary, you will feel as if you won the lottery, although you didn’t buy any tickets at all. Your former daily habit of living on $3 of instant noodles is gone, but replaced with a desire to afford yourself some nice sushi and fancy cocktails. Welcome to the world of lifestyle inflation. You see, you are entitled to live more comfortably after earning a degree and receiving the salary.
But sorry to burst your bubble – the voice you hear is working against you.
You are not your salary; you are your savings rate.
This comes from the psychological phenomenon called hedonic adaptation. Simply put, the joy of having a nicer apartment and a car will pass very quickly. You will adjust to the granite countertops in a matter of a few weeks and look for something else, thus creating a vicious circle. It causes people with high salaries to live from payday to payday.
So, the key here is to create a buffer between the salary you receive and your spending habits. As soon as the money appears in your bank account, automatically transfer the portion to savings and investments. First thing to pay to is always your future self. This is how much money you can actually spend. It should be considered a challenge – try to keep this number as low as possible.
Learn to distinguish between comfort and status symbols. The reliable Honda Civic fulfills the same function as an expensive BMW 3 Series, except it costs less and consumes cheaper fuel. Cooking at home with your friends is way more interesting than dining out in an expensive restaurant. The point is to finance your freedom and not your desires.
See, it’s not about deprivation; it’s about intentionality. Saying no to an expensive gym membership means putting aside money for down payment on the house. Going for bike ride instead of using Uber ride is saving for vacation. Every financial choice is the decision that determines your future life.
It is the time when your money should be compounding, not your expenses.
The real status symbol here isn’t the fancy purse; it’s the emergency fund and sleeping soundly at night knowing that you have the possibility to quit an unsatisfying job without worrying about your expenses. It’s priceless peace of mind, and it’s the best upgrade you could give yourself.
When the next temptation comes, ask yourself a simple question. Does this purchase serve my long-term goals, or just my ego? The answer will guide you to the correct decision.
Your future self will thank you when he’s enjoying sunny days on the beach because of your deliberate decisions.