This week I want to talk about lifestyle inflation. But this time – it’s not about how to avoid it.
But rather how important it is to leave some wiggle room for changes during your retirement, and the ability to thoroughly re-evaluate your spending in your post-Financial Freedom life, to permit some very intentional lifestyle inflation.
What works for us during our working days may not be nearly as enjoyable once we have more freedom available to us – so it’s absolutely essential to reevaluate where we are spending (and not spending) pursuant to a such a major life transition.
For us, re-evaluating where and how we spend our money has become a recent area of focus. For the first 2+ years of our retirement – when it comes to lifestyle costs, we hardly changed a thing. In fact – what we did change, making coffee at home over going to Starbucks, ended up saving us money, rather than costing us more!
Which is ironic, because when Mike and I talked about what we wanted our retired life to look like, we specifically structured our financial plans around having MORE disposable income than what we averaged during our pursuit of Financial Freedom.
Aside from our desire to continue to have ongoing savings, and an increased travel budget, we also wanted to allow for our day to day lifestyle expenses to increase by $1000 p/month.
We took these steps for a few reasons.
1 – The Safety Net
When you are looking at creating a life of Financial Independence that is going to last (hopefully) for decades, it’s awfully nice to have some buffer room. So we made sure our income streams allowed us to continue to save a reasonable chunk of money annually. For us this was an essential aspect of our overall financial plan, and comfort level.
2 – Forecasting Our Future
We also bought into the concept of Dan Gilbert’s book, Stumbling On Happiness, which highlights just how much we all suck at predicting our future wants. So we decided to make sure we had room for some of our day to day wants to fluctuate over time. More buffer.
3 – A Bigtime Motivator
We then used the prospect of having the future wiggle room to indulge a bit more as a massive motivator for our overall pursuit of Financial Freedom. For those moments of weakness when we contemplated deviating from the plan, the idea of those future indulgences kept us moving towards our goals.
But once we both found ourselves in retirement, we unconsciously did something that I would recommend to everyone making this transition.
We didn’t change much of anything about our expenses or lifestyle. We just kept living how we had been living, and we settled in.
This did a few things for us that I think were incredibly helpful.
First off – it showed us that we could be perfectly happy living on the budget we had established pre-Financial Freedom, even in the absence of work. If we ever need to tighten our belts in our post-Financially Free life – we know 110% we can not only do it, we will continue to enjoy our life regardless.
That’s powerful knowledge to have.
Secondly – it gave us time to slowly evaluate what we liked about our existing lifestyle, and identify area’s where we felt some indulging would bring us sufficient ROI. This meant we didn’t make any rash changes or impulsive decisions about where to spend our additional lifestyle dollars.
Thirdly – and this is the most honest reason of them all. I was AFRAID to allow us to increase our lifestyle at all. What if I went too far, what if I spent too much, what if I got too reliant on a more inflated lifestyle?
I was (and still am) a little bit scared of the slippery slope that is lifestyle inflation. After all the hard work we put into getting here – there are times that I can’t help but think that maybe we should just play it ultra, ultra, ultra safe, lest we suddenly find ourselves living above our means?
That fear made it difficult to feel good about spending money elsewhere. But, as I’ve slowly paid attention to my own fears (and said them out loud), I’ve realized that intentionally making decisions about adding in some lifestyle indulgences is a far cry from turning into a big-spender, or someone who doesn’t pay attention to their finances.
So over the past 6 months, Mike and I have been ruminating on what we feel would bring substantial value to our lives. What things we would really like to add in our current day to day. What would add to our happiness factor, and optimize how we use or time?
While we previously elected to reduce our coffee budget by spending less time at the Starbucks drive-thru, and trying our hand at become home brew barista’s, we utilized that swing to buy annual memberships to our local zoo, aquarium and Science World.
The annual memberships at these locations were not only quite cost effective, given how often we visit, but they provide a great array of options for the whole family, on both sunny and rainy days. The latter of which we are in for a lot of over the next 6 months here in Vancouver.
With the reduction in our coffee budget, these additional purchases were a wash. Actually – we still ended up saving money, some of which Mike decided to spend on Jiu-jitsu classes with our oldest, I spend on once a week yoga classes, and we collectively developed some additional giving strategies.
But more recently, we’ve finally taken active steps to intentionally increase our lifestyle expenses.
Lifestyle Add-on #1
For starters, we added in getting regular take-out dinner once a week. We used to do this on occasion, but it was far from a regular thing. But with Mike also taking on the responsibility of cooking a dinner once a week, this means I get two nights off from cooking each week. Let me tell you – I’m really liking this one.
Because there is a wide variety of affordable take-out options in our area, this added cost to our lifestyle budget ranges from 30-50 dollars extra per week.
Lifestyle Add-on #2
The most expensive change however takes the cake as my absolute favourite. We hired a cleaning service!
This is one I’ve literally been contemplating for YEARS. Back when we were working, I thought a lot about hiring a cleaning company. How nice would it be not to spend my limited time off cleaning the house?
But then after we retired, I just couldn’t wrap my mind around hiring a service. In my head, I immediately thought of the judgement I would get from people.
I don’t know which people specifically, because no one I know would actually say this to me, but words to the effect of “Ummmm….you’re retired, what else are you going to do with your time?” echoed in my head.
Shouldn’t I basically be Martha Stewart now? With a spotless home, freshly baked cookies awaiting the arrival of any guest who should pop by unannounced, and made from scratch meals lovingly served on a perfectly set linen table cloth promptly at 8, noon and 6?
But, the more I thought about it, the more I realized, I didn’t care to spend my free time scrubbing bathrooms, dusting shelves, or cleaning windows, and I am definitely NOT Martha Stewart. Nor did I care if people realized that about me, or judged me on it.
Okay – that’s not true. I do care – don’t we all? I just don’t care QUITE enough to continue cleaning my own bathrooms.
After all – I DO want to exercise the freedom of choice over my time by improving my cooking abilities and preparing nutritious and yummy meals for my family, but cleaning toilets. Nah, I’m good.
Ideally, I also want to spend this time doing fun things with my kiddos, liking visiting the zoo, aquarium or Science World – rather than plopping my 2 year old down in front of Peppa the Pig just so I can clean the blinds, which has been known to happen (pre-cleaning service that is).
AND let me say – one thing about a family of four, with a toddler, regularly being home……. we make our house a LOT dirtier than we ever used to when we spent 10+ hours a day at work, school and daycare!
So while I still have the day to day cleaning to take care of, there’s no doubt this service is a game changer for me, and I am loving every bit of it. BUT, it also rings in as the biggest ongoing expense we’ve added. At $175 per service, currently scheduled for twice a month, it adds $350 to our monthly budget. We may dial this service back to once every 3rd week, but we’re still early on and trying to see what the right amount of time is between cleanings.
The Bottom Line
After 2+ years of retirement, these additions brings our total lifestyle inflation up an average of $510 per month. Still only 1/2 of what we had specifically budgeted for our day to day lifestyle inflation amount. A bonus upside – until we find something else that we REALLY want to add into our lifestyle, we are still saving an extra $490 a month, over and above our original $2100 p/month savings goal.
I think at this point we are pretty happy with the additions/subtractions we’ve made, including the fact that we continue to have room to add a few things down the line should we feel so inclined.
While we definitely have a bit more work to do on evaluating the expenses we brought with us (IE: I still really waffle about whether or not I want to have a cell phone), I’m very happy about where we have landed with our intentional lifestyle inflation. While a small part of me wishes we had done this sooner, I also recognize that waiting made these indulgences that much more impactful, creating a whole lot of gratitude and contentment for where we are at.
Tell us – what indulgence(s) would you add to your lifestyle once you reach Financial Freedom?