Setting a baseline budget helps us avoid lifestyle creep and save thousands
To create the baseline, we looked at our average monthly expenses as well as our average monthly income to find an amount that allowed us to pay our bills without extravagant spending. This was the amount we knew we could live off of.
In 2019, my husband and I were able to save a significant amount of money by budgeting on our baseline and putting extra commission and bonus money into our savings account. We knew there were upgrades we could have made to our home, but we were also looking to potentially move and wanted to save as much money as we could before then. Forgoing home projects and the latest iPhones, as well as watching what we spent in other areas, made it possible to save a considerable amount.
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A version of this article originally published in April 2017.
Investment advice abounds for people just starting out in their careers, as well as for those who are getting ready to retire.
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Updated Jan 12, 2021 | 12:35 IST
Earnings are not necessarily uniform over all the years of one s life. Here s how to manage money well so that your surplus cash flow is saved to bolster a more comfortable retirement. Manage your money well | Photo Credit: Representative Image
Key Highlights
Lifestyle creep is a condition that happens when a gain in income makes one justify the increase in spending on non-essential items.
When the standard of living has improved, one feels luxury goods are a vital necessity and reason flies out of perspective.
The sad part of this phenomenon is that many a time when income decreases due to illness, unemployment or retirement, people run out of savings as they continue to live above their means.