Lifestyle inflation indicates the rise in your lifestyle expenses, which is a function of rising costs and your rising disposable income. As your disposable income increases, you may develop some tastes and desire, which come at a cost. Eating at fine dine restaurants, playing golf, a foreign holiday, watching movies at multiplexes are some examples. This inflation is also triggered by plethora of options available for individuals especially in urban areas. For example, you would have been content to watch movies in an ordinary movie hall a few years ago. Cost of a movie ticket has jumped from Rs 50 in 1990’s to Rs 250. Now, the wholesale price index, from where the headline inflation is derived, does not include these costs. This is what you spend on maintaining a lifestyle that you desire; hence it is termed lifestyle inflation. Lifestyle inflation is not a published figure and it varies from individual to individual.
Provide financially for Lifestyle Inflation
You have to financially provide for this inflation while planning for your future. One of the ways of doing it is by evaluating your expenses in the past 2-3 years. Identify a pattern by seeing how much more are you spending for a similar service today as compared to 2-3 years ago. It could be dining, salon, gym or even club memberships. Identify the lifestyle needs, which you can’t forgo and put a rough futuristic estimate against those expenses by adding an annual inflation of 8%.
No comments:
Post a Comment