Got a Raise? Now Don’t Let Lifestyle Inflation Rob You Blind

So you finally got that long-awaited pay raise—congratulations! Maybe you’re already browsing new condo listings or planning a celebratory hotpot dinner with the crew.

But before you go full HDL and swipe that card a little too freely, let’s talk about something sneaky that ruins more financial futures than bad investments ever could:

Lifestyle inflation.

Don’t worry—it’s not about giving up your joys or living on instant noodles. It’s about making smart choices after the raise, not just before. Here’s how to enjoy your upgraded income without downgrading your future.

First, What Is Lifestyle Inflation?

Lifestyle inflation is what happens when your expenses quietly grow in tandem with your income.

You get a $500 raise, and suddenly:

• Coffee = artisanal pour-over only.

   

• Grocery run = NTUC Finest instead of Sheng Siong.

   

• Dog food = imported raw organic beef.

   

Nothing wrong with enjoying life—but when “small upgrades” creep into every area of your spending, you don’t actually get ahead. You just have shinier things… and the same amount of money left at the end of the month (or less).

It’s a silent trap. You’re not splurging on a Lamborghini—but those daily GrabFood orders, new streaming subscriptions, and fancier phone plans? They add up. Fast.

Why It’s So Tempting (And Why You’re Not Alone)

Lifestyle inflation is baked into our psychology. It’s called the hedonic treadmill—you get something new, feel great for a while… and then it becomes normal. So you chase the next upgrade.

Also, let’s be real—Instagram doesn’t help. Everyone seems to be holidaying in Japan or buying property. But remember this: not everyone who looks rich is actually wealthy.

In fact, studies show a growing number of millennials and Gen Z-ers are:

• Going into debt to keep up appearances

   

• Feeling pressured to overspend just to fit in

   

• Even ending friendships over financial incompatibility

   

When your social circle influences your spending more than your actual goals, it’s a red flag. And it’s time to hit pause.

How to Avoid Lifestyle Inflation (Without Becoming Miserable)

Let’s get to the good stuff—how to keep your financial discipline and your quality of life.

1. Pay Yourself First

Before the raise hits your main account, siphon off a chunk into savings or investments.

• Automate it: set up a recurring transfer to your high-yield account or CPF SA

   

• Rule of thumb: Save at least 50% of any raise

   

• Bonus: Use apps that round up your purchases into investments (small habits, big returns)

   

2. Set Clear Financial Goals

Vague goal: “Save for a house.”
Clear goal: “Save $50,000 over 5 years = $833/month.”

Specific goals keep you focused. They turn impulse buys into conscious decisions. Ask yourself:
“Will this $300 splurge bring me closer or further from that beach house in Bali?”

3. Practise Conscious Spending

Not all spending is bad. The key? Spend on purpose.

If that $100 goes toward your dog’s health, a meaningful hobby, or a memory-making experience—go for it. But if it’s just another online cart filled out of boredom, maybe reconsider.

Values-based budgeting helps. Identify what matters most and cut ruthlessly on what doesn’t.

4. Kill Subscription Creep

You probably forgot about:

• That streaming app you never use

   

• The fitness app you opened once in January

   

• Three overlapping music subscriptions

   

Track them. Trim them. Tools like Rocket Money or AFinance can help.

5. Celebrate Wins Strategically

Yes, you should reward yourself. But do it with intention.

Try the 90/10 rule:

• 10% of your raise = guilt-free fun (nice dinner, short getaway)

   

• 90% = savings, investments, or debt repayment

   

It’s the difference between “I earned this” and “I blew it all again.”

6. Let Your Money Work While You Chill

Don’t let extra cash sit idle. Grow it.

• T-bills? Safe.

   

• ETFs or blue-chip stocks? Solid.

   

• Robo-advisors? Easy to set and forget.

   

Remember: Compound interest is the closest thing to magic in personal finance. A modest S$10K invested in your 30s can snowball into S$100K+ by retirement if done right.

What Happens When You Say “No” to Lifestyle Inflation?

1. Your Dreams Get Closer

House. Sabbatical. Early retirement. That yoga retreat in Bali. Whatever your “someday” dream is—avoiding lifestyle creep brings it closer, faster.

2. You Stress Less

When you’re not living paycheck to paycheck—even on a big paycheck—life just feels lighter. An emergency fund becomes a cushion, not a goal you keep postponing.

3. Your Future Self (and Family) Thanks You

Less debt. More freedom. Maybe even a legacy to leave behind. You’re not just building wealth—you’re buying peace of mind, options, and freedom for the people you love.