As people’s salaries increase, they tend to increase their spending as well. Their expenses become equal to their salaries, which means they are unable to save or invest any money. They simply earn and spend. This is exactly like running on a treadmill. You run a lot, but you don’t get anywhere. You work hard all month, but at the end of the month, you don’t have a single rupee left. We will talk about how increasing your standard of living can trap you in a financial trap and how to get out of it.
A Personal Experience
A few years ago, I was also facing this problem. It took me four years to understand this, and I will share my entire experience in this post.
When I was earning less money, I used to save money. But when I started earning more money, I didn’t have a single rupee left because when I was earning less money, I used to live in a cheap room, eat cheap food, wear cheap clothes, and not buy any fancy items. I didn’t buy anything on EMI either. So I lived a minimalist life and I was able to save money.
But as my salary increased, I increased my standard of living and my expenses. I rented a bigger room, started eating expensive food, bought a bike on EMI, and bought some other small items. As a result, I was unable to save any money. All the money went towards expenses and EMIs. I got stuck in a cycle of earning and spending. I was just earning and spending, and nothing else.
There are two disadvantages of increasing your standard of living along with your salary:
1. You are unable to save any money. All the money goes towards expenses. There is no investment.
2. You get into debt. You buy things on EMI and then you become a slave to your job. You get stuck in a cycle of living paycheck to paycheck.
The Solution
I faced these problems, and so do many people. So what is the solution?
First, when my salary increased next time, I did not increase my standard of living. I kept my standard of living the same as it was before.
Second, I started saving money.
Third, I stopped buying things on installments. If you want to buy something, try to buy it in cash. And if you can’t afford to buy it in cash, buy it second-hand. But don’t buy it on EMI. If you buy it on EMI, you will become a slave to others. You will earn Rs 4,000 to Rs 5,000 for someone else every month. But if you buy it in cash or second-hand, then even if you earn Rs 1 the next day, that Rs 1 will be yours and yours only.
Conclusion
Increasing your standard of living along with your salary can be a financial trap. To avoid this trap, it is important to save money and avoid buying things on installments. By following these simple tips, you can achieve financial freedom and live a comfortable life.