Lifestyle

A financial planner explains why ‘lifestyle creep’ is such a huge problem for people in their 30s

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Friends cheers

There’s lots of pressure in your 30s to stay informed about those around you.

But as your friends (and foes) start reaching these milestones, it can be inviting to try to keep up, even in the event that you understand that you can’t manage it or their targets don’t align with yours.

“[S]ometimes that becomes more challenging in your 30s and 40s when you view all your buddies purchasing a finer house or automobile that is fine, and you also begin thinking , why am I not doing that?’” Katie Brewer, a Dallas-based CFP and creator of Your Most Affluent Life, told Company Insider.

“I constantly refer to it as ‘lifestyle creep’ because one of the huge things that individuals can do — that’s an edge to them — is keep their fixed expenses somewhat steady and fair for what they make,” she said, referring to monthly or yearly expenses like mortgage or rent, a car payment, and insurance, for instance.

Preparation for your recurring prices ensures that expenses derail your financial future as well as won’t creep up on you.

Brewer says that working on stabilizing fixed expenses is something she often helps her 30-something customers with, a lot of which are working couples and couples preparing for children.

So long as your lifestyle doesn’t overtake your income, naturally, Brewer said, if you’re making good money you need to get the liberty to spend it how you want.

“I believe there’s a great balance between taking some of that [money] and placing it toward your long term aims and taking some of it and setting it toward your short-term targets,” she said. “And individuals can do both, it’s not an either or, but that’s something that actually makes a healthy financial future.”

Source

http://www.businessinsider.sg/why-its-important-in-your-30s-to-keep-fixed-expenses-low-2016-11/