Top News

Today's generation wants a better lifestyle, but due to increasing expenses i.e., "lifestyle inflation", savings and investments are getting affected. This habit can become an obstacle to long-term financial goals.

In today's time, the desire for a good lifestyle has become everyone's priority. But is this improved lifestyle becoming an obstacle in your long-term financial goals? Actually "lifestyle inflation" (increase in unnecessary expenses in lifestyle) is affecting the savings and investments of today's youth and middle-class families.

So the question arises that how does your better lifestyle affect financial goals?

Increasing unnecessary expenses

Today, people are becoming completely dependent on expensive smartphones, fast fashion, fitness subscriptions, food delivery apps like Swiggy/Zomato. Let us assume that about 45% of the youth spend more than 30% of their income on "lifestyle management".

Burden of EMI culture

For all of us, savings are being affected by credit cards, personal loans and "big expenses taken without planning" (like expensive cars, gadgets). According to RBI data of 2023, the outstanding personal loan in India is more than ₹ 40 lakh crore, in which about 35% of the loans have been taken by the youth.

Effect of social media

Nowadays everyone is spending money unnecessarily in the pursuit of a show-off life, due to which the financial situation is getting worse and they are getting away from savings.

How to balance lifestyle and financial goals?

1. Follow the 50-30-20 rule

50% of your income: essential expenses (rent, grocery, bills).

30%: your lifestyle (entertainment, travel)

20%: for savings/investment (SIP, FD, mutual funds).

2. Keep a "no-spend day"

Always remember one thing that you should spend one day in a week without spending money. This will help you control your expenses.

3. Avoid EMI

As far as possible, do not use loan or credit card for non-essential things. Even if you are taking EMI, it should never be more than 10% of your income.

4. Make savings "pearly"

As soon as you get your salary, always put 20% of the money in savings/investment. Although you may spend this money later.

5. Set goals

Separate funds should be created for short-term (vacation), medium-term (car) and long-term (retirement) goals. (Note: This article is for information only and should not be considered as investment advice in any way, it is recommended to consult financial advisors for investment)