I’ve thought about this topic for a long time now because I’ve seen employees in the Technology Industry fall prey to lifestyle inflation over and over. Some succumb to it slowly, be it over a span of months, while other fall victim to it within days of getting their offer letter. Either way, their behavior is the same: Spend beyond their means, and save little. Well, us employees in the Technology Industry don’t have to live this way. I’m an example of that. Here’s how I avoided lifestyle inflation and kept a majority of my high salary.
Avoid Lifestyle Inflation By Waiting To Make Big Financial Decisions
Upon joining Twitter as a Site Operations Technician in 2017 my salary skyrocketed. I dreamed of what I would do with all that money, and those dream were purely materialistic. Thoughts of purchasing a new car or upgrading to a luxury apartment abounded. Yet, as the days wore on after receiving my offer letter I came back to reality.
Making a big financial decision like buying a car, renting a more expensive apartment, purchasing a house, or even buying expensive electronics wasn’t a good idea because I had no idea what my net salary would be. Although we, as employees, love to live by our gross salaries, that’s the wrong way to live. We gotta pay our taxes and our portion of benefits like health insurance.
So I waited to receive a few paychecks before making a big purchase. That way I knew how much my net income would be after taxes and deductions. I could budget better knowing that amount than having to fit in a large expense into my budget.
When the topic of money came up at work, I was honest with my coworkers can explained my financial habits. They like it in theory only. I had one coworker who converted from a contractor to a permanent full-time employee, and went out and bought a car the same weekend of getting hired. Unfortunately, this wasn’t an one-off event; I had a few other coworkers buy new and used cars upon getting hired.
Avoid Lifestyle Inflation By Not Keeping Up With The Joneses
Some employees are able to dodge lifestyle inflation until they feel inadequate after seeing their coworkers purchases. These employees were perfectly fine with their car or computer or smartphone until they saw their coworkers with the latest car or computer or smartphone. These employees feel they’re out of the loop, and want to be part of the “cool club” again, so they spend the money. Thus, they begin the vicious cycle of keeping up with the Joneses.
Honestly, I experienced this myself. I own a 2013 Kia Soul with over 130,000 miles. When I see the new cars my coworkers get that urge to get one myself hits me. Another example: I thought about getting a new Pixel 8 phone because it’s on sale and I can use my employee discount to lower the price even more. Finally, hearing about the trips my coworkers take makes me want to travel more even though my job has me traveling constantly.
So how did I escape from keeping up with the Joneses? I used willpower and discipline. I also told myself I didn’t need a new car or a new smartphone because the ones i had worked perfectly fine. Finally, I ran the numbers of how much a car payment or a vacation would reduce my ability to save money (which is a top goal of mine). Once I saw the numbers on the piece of paper that really removed that urge to splurge.
Instead Of Spending, Use Your High Salary To Improve Your Life
I believe a great way to combat lifestyle inflation as Technology employees is to use our high salaries to improve our lives.
I know a few employees at Google using their Google Stock Units (GSUs) to pay off their credit cards or get out of student loan debt. Others use them in addition to their salary to purchase their first house. In my opinion this is the right move.
Working at Twitter gave me the ability to get completely out of debt. I paid off my car and my student loans. Then i saved that freed-up money to put a downpayment on a house about a year after getting out fo debt. With my discipline, willpower, and planning I improved my financial life. And those improvements continue today while working at Google.
So I highly suggest that Technology employees use their high salaries for good. Yes, I understand they want to treat themselves for their hard work, and I’m fine with that, but those treats should be few and far in-between. Because once those treats become frequent that becomes a habit. And those habits are hard to break.