Every year you receive a salary increase, but how come you only save or invest that much? Are you one of the people who experience this? What actually happens?
Get to Know Lifestyle Inflation
If something similar to the above also happens to you, you are most likely experiencing something called lifestyle inflation. In short, lifestyle inflation can be interpreted as a situation where your expenses increase along with your salary.
Why salary increase can cause lifestyle inflation
It is natural that salary increases lead to lifestyle inflation. A person's behavior or habits change because their income is now greater (reference: CNBC).
Someone who previously rented an apartment with friends now wants to rent a studio for convenience reasons. Someone who previously exercised using available equipment at home is now interested in paying for a gym membership. Someone who previously only ate at a restaurant twice a month now eats at a restaurant every weekend.
All of these are examples of lifestyles experiencing inflation. A person's financial capabilities become greater with an increase in salary, thereby encouraging adjustments to lifestyle. However, if it is not controlled properly, lifestyle inflation can lead to increased consumer debt, as well as causing savings not to grow as they should.
How to Avoid Bad Spending Habits the Way You Want by Managing your finances with Jago
By managing finances regularly, it will be much easier for everyone to avoid lifestyle inflation. Not only does it not waste money, but savings can continue to grow over time. What are some ways to manage finances that you can start doing?
1. Mindfully decide the budget for each expense and savings
The first way to ensure that your expenses and lifestyle do not increase when your salary increases is to budget. How much did you spend before the salary increase? Make sure you decide a budget for each of your expenses after the salary increase by sticking to previous ones.
Of course, there's nothing wrong with increasing your budget for wants, desires or pleasure. There's nothing wrong with a lifestyle that experiences a little inflation. However, spending must still be controlled properly so that lifestyle inflation does not go too far.
Creating or adding financial goals can also make it easier to avoid lifestyle inflation. If you previously had 2 financial goals to achieve in the near future, you can add 1 more so that some portion of the salary increase can be saved in savings, rather than spent on fulfilling your lifestyle.
Did you know that Moneyfesting can help you get on a healthy financial path and make it easier for you to manifest your financial goals?
Easy and practical budgeting the way you want can be done using the Jago Pocket. For every daily or monthly expense that is not savings, create a Spending Pocket. The number of the Pockets can be adjusted to your needs. Allocate the budget mindfully and regularly to each Spending Pocket. Meanwhile, for savings, you can create a Saving Pocket or Locked Pocket.
2. Choose to automate saving money to realize Moneyfesting and control expenses
Whatever Moneyfesting you want to make happen in the future, one of the best ways to ensure it really becomes a reality is to save consistently. To be practical, you can save automatically. In the Jago application, there is the Autosave feature so you can save automatically in the Saving Pocket and Locked Pocket.
By saving automatically, you also ensure that not all the money is just spent or used to fulfill your lifestyle. This is because the money has been automatically allocated to savings. You could consider automatically allocating your salary to savings on payday or some time afterward.
3. Open several savings accounts
Apart from the Saving Pocket and Locked Pocket, you can also consider the Jago Deposit as a place to save money, especially for long-term goals.
At the same time, you can have a Savings Pocket, Locked Pocket and Jago Deposit. So, you don't need to worry. Choose a flexible place to save the way you want. Do you want to have 2 Saving Pockets, 1 Locked Pocket and 2 Jago Deposits? At Bank Jago, it's indeed possible. Open several saving accounts for short-term and long-term Moneyfesting.
Bank Jago Makes It Easy to Open Savings Digitally or Online Without Admin Fees
No matter how many savings or accounts you have, you don't need to worry about admin fees, let alone the long account opening process.
Bank Jago is a bank where you can open more than 1 account or savings the way you want and according to your needs without having to pay monthly admin fees.
Apart from that, opening a new savings or spending account can be done via the Jago application. Fast and practical without needing to go to a Bank Jago branch. The way to do this is to create a new Pocket. You can only have 1 Jago account with the Main Pocket as the main account. However, you can open multiple Pockets as additional accounts and close them if they are no longer needed.
So, are you ready to avoid lifestyle inflation, not get trapped in bad spending habits and become better at managing your money and achieving your future financial goals the way you want?
