Photo illustration of the good life (when you can't afford it)

Lifestyle inflation is an easy concept to define: when you make more, you spend more. The opposite is just as simple: When you make more, why not save more?

Are you guilty of lifestyle inflation? If you draw a salary, you may need to confront it at some point this year. According to the 42nd annual “WorldatWork 2015-2016 Salary Budget Survey,” the average 2016 budget for raises in the United States was forecasted at 3.1 percent. If this is you, will you bank the difference or plunk it down on a better class of car? Splurge on a vacation?

Here’s what Get Rich Slowly contributor Kristin Wong had to say about the phenomenon back in 2013. It still rings true today: 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. 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.

Three simple steps to avoid lifestyle inflation:

1. Bank every raise or bonus.

    Divert the difference in pay immediately into a high-yield savings or retirement account.

2. Prioritize Debt. If you come into extra money, put it to work paying down debt.

3. Focus Internally. You don’t have to keep up with the Joneses, promise. Living below your means isn’t just smart, it’s the very definition of financial stability.

What are your thoughts on lifestyle inflation?

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