This article is by staff writer Kristin Wong.

Lifestyle inflation gets a bad rap, and understandably so. It’s so darn tempting and so many of us seem to have a serious problem controlling it. But inherently, lifestyle inflation isn’t a bad thing. Lots of Get Rich Slowly readers have made this point, and I agree: if your finances are in order, what’s wrong with treating yourself to a little luxurious lifestyle upgrade?

In fact, I’d like to argue that lifestyle inflation can be done responsibly.

I live below my means, but I’m not eating beans every night, either. As I’ve gotten older and my finances have evolved, I’ve admittedly engaged in a little more lifestyle inflation. But I’ve always been careful and mindful of it. Here’s how I feel I’ve handled my lifestyle inflation responsibly.

I make sure I can afford it

Before I take on a lifestyle upgrade, I ask myself, “Can I afford this?” And then, before I make a final decision, I ask myself, “Really, though. Can I afford this?”

In fact, I also make sure that I could afford the luxury if I were earning significantly less — say, half of my income. There’s no formula for calculating the worth of lifestyle inflation, but any luxurious expense should only take up a small percentage of your income. The point is, I err on the side of caution. In a culture notorious for overspending, playing it safe can’t hurt.

I consider my finances and goals

And maybe a better question than “Can I afford this” is: “Should I afford this?” After all, just because someone earns a decent income doesn’t necessarily mean their finances are in order. Or, maybe you’re earning a high income, and your finances are in order, but you’re also saving up for a down payment on a home. In that case, you can afford lifestyle inflation, but, if you want to reach your goal, you probably shouldn’t give in to it.

When I was in debt, I didn’t even consider lifestyle inflation, and that’s not a knock on anyone who has made different choices. But I was young, earning a lot, and I really, really wanted to get out of debt. I didn’t feel like I could afford many luxuries when I owed thousands. I made debt a priority over lifestyle. Looking back, this was a good financial decision.

Unfortunately, I’m now back on a tight budget. I don’t have much room in my life for upgrades. Recently, while checking in to a flight (purchased before my job loss), I came across a great deal on lifestyle inflation — $50 for an upgrade to first class. Despite it being a great deal on luxury, I still had to pass. I asked myself, “Can I afford this?” and I answered, “Technically, I guess. But I don’t have steady income right now, so I probably shouldn’t.”

I take advantage of opportunities to upgrade for less

Remember my stupid car accident from earlier this year? Well, I planned to simply replace my old Corolla with a similar model, new or newer. I was sure the insurance company would pay me a paltry amount for my total loss. I figured I might have to pay some cash out-of-pocket, too, if I wanted a new car or at least one with better mileage in slightly better condition.

I was surprised. The insurance company offered me $13,000 for my car — the high end of its value. It was actually more than my car originally cost, because we got an awesome deal on it at the time. Anyway, when we got the check, I came across a deal on a 2010 Volkswagen Jetta for $15,000, out the door. It was a nice car, low mileage and in great condition. I’ve never been much of a car enthusiast, and I planned on driving my Corolla into the ground. But $2,000 was a good deal for a significant lifestyle upgrade. And I was prepared to spend that money anyway.

But there was another option: buy a cheaper car, and put the insurance difference in savings. That would’ve been a good option, too, and if I were in a different financial position — say, 21 with student loan debt — I would’ve gone with it. At the time, however, I was earning a lot, I had a large emergency fund and I’d maxed out my retirement. I decided that, if something bad happened, and my income significantly changed, the $2,000 wouldn’t be crucial. It wouldn’t be the difference between my sinking or swimming. So I decided to take advantage of a “discounted” lifestyle upgrade. And, even though my income did significantly change, I still don’t regret my decision.

I consider the long-term costs

With a lot of luxuries, there are long-term or continuing costs that are easy to overlook. In the example of the Jetta, I asked myself how much more I would be paying for fuel, insurance and even depreciation than if I were to buy a Corolla. And this is a somewhat outdated example, but years ago, when I bought a Blu-Ray player, I had to consider that Blu-Ray discs were more expensive.

By considering both the long-term costs and my financial possibilities in the future, I’ve been able to enjoy some lifestyle upgrades without having to compromise my financial freedom.

Thus, I don’t regret my lifestyle upgrade decisions of the past. My income has significantly decreased within the past two months, but my lifestyle decisions aren’t coming back to haunt me, and I think it’s because I went about my lifestyle inflation responsibly.

What do you think? Can lifestyle inflation be responsible? If so, how do you make your decisions when contemplating lifestyle upgrades?

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