Summary: Hungry for more cheesecake stories from LaTisha and Paula about money mishaps? This week's WealthFast Podcast focuses on that one oh-so-human habit that prevents millions of people from achieving true wealth: lifestyle inflation. What's lifestyle inflation? Simply stated, it's the practice of raising the bar for what you consider to be a baseline cost-of-living. As your income rises, so do your expectations. You adjust to a "new normal." You'll know whether or not you've experienced lifestyle inflation if the amount of money that you supposedly "need" in order to survive is a much larger sum than it was a few years ago. Want to hear a few examples? Paula bought a $30 dress when she was in college. At that time, that dress felt indescribably expensive. She earned $6.45 an hour during her first year of college; that dress represented one full day's wages. Fast-forward to 2012: she doesn't think twice about buying a $30 article of clothing. Her expectations have risen. That's lifestyle inflation. LaTisha, on the other hand, offers a fantastic example of not succumbing to lifestyle inflation: she chooses to live in a reasonably-priced apartment. It has low utility bills (being on the third floor is great in the winter, when heat rises!) and it's only minutes from her job, so her commuting time and costs are next-to-nothing. This allows her to devote her money to higher priorities. Sure, she could opt to live further away from work, in a more expensive home with higher ongoing utility costs. But since she's happy with her current apartment -- it's already her standard baseline of "normal" -- why adjust it? That said, there are times when lifestyle inflation is okay. And, of course, there are times when it's excessive. Here are a few questions you should ask yourself if you're thinking about raising the bar: Does it help you save time? Does it free your mind to concentrate on other tasks? Does it add a “small joy” to your life, which gives you the motivation to keep persisting towards the bigger picture? In this episode we also discuss this week's Think Rich tip, which is to have a vision board that portrays what you want your life to look like in the future. (No, your vision should not be to simply start a board. Think big.) As always, if you have questions, comments or a story you want to share, call our hotline at 770-744-0527. You can access that hotline through our Contact Page, or via the awesome icon in our right-hand sidebar. Mentioned on this episode: Fiverr.com
