People often assume that getting a substantial raise will help ease their financial burden. Unfortunately, once the raise arrives, these very same people often find themselves still struggling to make ends meet; living from pay check to pay check. Puzzled over their predicament, they end up working longer hours to make even more money, not realizing the real source of the problem.

<img src="http://www.froodee.com/wp-content/uploads/2011/10/empty-wallet-sad-face1.jpg" alt="Sad face of a man Gaine & robes de mariée colonne
with empty wallet” width=”500″ height=”500″ align=”center” />

The scenario described above is a perfect example of what is called lifestyle inflation, a phenomenon wherein your living expenses increase due to an upgrade in lifestyle as your income increases. The funny thing about lifestyle inflation is that, just like the inflation of goods and commodities, it creeps up on unexpectedly until it hits you right where it hurts most – your pockets. Unless you are aware of the ways to beat this source of financial drain and resolve to address the issue, you will undoubtedly end up among the countless victims of lifestyle inflation.

To help you beat lifestyle inflation (and remind myself of the things I already know but should be doing more!), here are three things to remember:

Start keeping track of your budget – Proper budgeting will do your finances a lot more good at this very moment than a theoretical raise would. Even more Robes de bal importantly, once you do get some extra cash, you will have learned to keep track of your expenses so you don’t up overspending on things you don’t need. A lot of people figure that just keeping a mental tab of their expenses is good enough, which is a huge mistake because it often is not. Aside from listing down your weekly/monthly budget, keep track of your actual expenses to see exactly where your money ?????? ?????? is going and which areas you are overspending on and should cut back on.

Don’t count your chickens before they hatch – Optimism is a good thing, but when it comes to finances it is better to be conservative. Don’t rely on the money you don’t have right now to tide you over in the future. That means not purchasing things on credit and saving up for wants before going out shopping instead. This also mean being wise about big purchases such as cars and homes by making sure that you buy only what you can afford right now. If you can’t afford the mortgage payments on your current income, but expect that you can in a year’s time after you get a raise, then just put off the purchase or get a more affordable home.

Learn to say NO – One of the areas that can fast drain your finances is money that go out to other people, whether as gifts or as personal loans. While helping those in need is definitely a virtue, you need to learn how to say no before it becomes too much of a burden. Just because you earn more than people around you doesn’t mean that everyone should depend on you for hand outs. Learn to distinguish when you can give, when you should, and when saying no is the right course. Remember, in the end you can give only when you yourself have something to give. If you must, just keep your raise a secret. This way you won’t even have to worry about having people approach you for loans, and so be able to more freely give to those who you see are in need when you know you can (or should).

Image credit: Cayusa