Haven’t I earned a treat?
When your income goes up, it can be tempting for your lifestyle to adjust up too. An extra holiday here, a new outfit there.
It is known as “lifestyle inflation” – and many money experts suggest avoiding it.
Only 13% in this eZonomics poll admit to tending to spend the extra money if they get a pay rise, suggesting most are resisting temptation.
These findings echo those of Gallup’s 2013 Economy and Personal Finance survey, which found 60% of respondents enjoy saving money compared with 37% who enjoy spending it. The Gallup poll of more than 2,000 people in the United States found the gap between the two groups had widened a lot since the 2008 recession.
Save More Tomorrow
An innovative idea to boost savings without the pain of having to make lifestyle changes is to allocate part of future pay rises to goals.
Academics Richard Thaler (co-author of the influential book Nudge) and Shlomo Benartzi came up with the idea for increasing retirement savings. Called Save More Tomorrow, workers using the scheme do not make sacrifices on their current lifestyle – they simply forgo “upgrades” to lifestyle that eat up pay rises.
Thaler named it as his most memorable research experience in this interview with InDecision.