Skip to main content

Your Personalized Lifestyle Inflation Number

Inflation is a powerful term. It has helped change public discourse & has also been instrumental in rise and fall of governments. It is this fancy number which, of late, has been hovering not too far from the 5% (per annum) mark in India. Roughly put, this means that you are paying 5% more for the commonly used things than a year back. Of course, there are some bad years too as far as inflation number is concerned. And these bad years can dent your finances, especially if you are living paycheck to paycheck.
But has your cost of living really increased by around 5% (or whatever the inflation number is) over last year. And 5% over year before that?
There is no one size fits all answer to the above question. But for a good chunk of people this "inflation" number is probably more. This is more to do with tendency of ones needs, wants and desires increasing over a period of time. So, while inflation measure the price increase in a fixed basket of goods, your cost of living would have probably increased by that price rise (roughly around official inflation number) + cost of your needs that have increased over the year.
This number can be even 10 percent. Or 20 percent. Or even (minus) 5 percent if you have really adopted a frugal or minimalist living, though in long run, this negative number is unlikely to be sustainable due to inflation!
You shifted to a bigger house this year and your rent has increased by 25%? This contributes  to your lifestyle inflation.
Moved on from domestic vacations to international ones? Add few more percentage points to your lifestyle inflation number.
Kids moved to a better and more expensive school? And they plan to study abroad? Consider this number?
Cost of your healthcare has increased? Add this to the number as well.
So when you are in your "and then happily there after" financial planning mode and trying to figure out your requirements in terms of expenses, do consider your personalized lifestyle inflation number. It will most likely, be more than the official inflation number.It can serve as a handy number to plan things out.

__

You can also read this post on BeingFinWise
Labels:

Comments

Post a Comment

Shop @ Amazon

Popular posts from this blog

Assured returns from stock markets?

Stocks (and hence mutual funds) are often sold as something that give "assured" long term returns over a period of time. While this has been true for most of the times, and all time if we consider a long enough time horizon in India's recent history but is this always true? Can it be possible that stock markets can give lesser, say 10% returns over next 10 years? Or 5 percent annual returns? Or, taking inspiration from Nicholas Taleb, a black swan event happens and your end up barely recovering 80 percent of your principal amount (i.e. 20 percent loss) -   Theoretically yes.  Hopefully no.  I am not a predictor of future, nor are thousands others who claim to have more than 1000% percent surety of future events. So, if you are contemplating taking a personal loan @ 12% for some financial need and want to be invested in a mutual fund for "assured" 12 / 15/ 18/ 25 percent returns, maybe you need to rethink. If you want to borrow money @ 12% just to inv...
4 comments
Read more

Somewhere @ Nowhere - The Book

FINALLY .... After a tryst with so-called-creativity, I have come up with a book -  Somewhere @ Nowhere. You can have a sneak peek at the story & a few pages from the publisher's website and order the same & get it home delivered anywhere in India/ Abroad. Details as mentioned below- - Preview and get the book home delivered from HERE Also, you can join the following groups - - Orkut Community - Facebook Page Hope you like the work. Would appreciate a feedback. Till then ... Happy Reading!!! And yeah, please spread the word (relying on word of mouth & word of blog publicity) :-) ___ Update (18/02/2010) - Thanks for the initial response to the book :) Update2 (25/ 02/ 2010) - Thanks for the feedbacks on the book those who have read it. (hope to get a feedback by others soon). Encourages me to overcome inertia and write more! Meanwhile, those who ask for why is it currently not available in traditional retail outlets - well, I hope it wil...
15 comments
Read more

`Another Random Thought

"Man's mind , once stretched by a new idea , never regains its original dimensions." - Oliver Wendell Holmes Just wondering, what is the worst non-fatal, non-demeaning thing you can do to a person? Surely, one of them is allowing him/ her to explore things so that forms his opinions and ideas about things, and then exercise control (& not just give opinions) on what he should think, what he should deem as right or wrong & what he should do . Barbaric it may sound but probably allowing him to remain ignorant may be a better option . What say?
5 comments
Read more

Survival

Dark clouds were looming at the horizon. In few minutes they would have traveled few miles in westward direction and came closer. This is not usually the scene at noon in the hottest month of the year. Dark clouds meant something ominous. Probably sign of an impending storm or maybe a cyclone approaching. Sea is a capricious lady. Bay of Bengal was no different. It was infamous for cyclones, and Orissa was often at the receiving end of nature’s fury. Ramdas was few miles into the sea. So were his brethrens of the fishermen community. There were around a hundred boats in the sea that day. No one anticipated the storm. So no one even thought of staying back at the shore and miss out on their livelihood of the day. Ramdas was alone in his boat. He owned the boat. His son helped him with his job. They managed to get enough as to earn a square meal a day. They had a good rapport with others of fishing community. But of late that relationship was breaking down. No reasons for that. Nor wa...
8 comments
Read more

Cycle

After a failed attempt at jogging, I roamed about aimlessly when an idea struck me to have a ride in a cycle, couple of which is lying in the “recreational area”. I was longing since long to ride a cycle sans motor. There was no particular reason for this feeling; it was that just I wanted to have a ride. The 2-3 km ride was a tiring experience, especially for one who is having this after a long time; but I was gleeing all along. As an infant, I loved going about in a tricycle. Then I became too big for it and got a cycle. After several attempts and many falls, I mastered the art. I used to flaunt it in front of my friends, who flaunted theirs. As I entered teens, the bicycle seemed smaller; so I got a bigger cycle. As years progressed, I learnt to ride a 2 wheeler. Now I started to find the bicycle too childish for my tastes. I tried to reason out why I should get a 2-wheeler to go to a particular place. Sometimes I succeeded to get it, and sometimes I didn’t and had to go around in...
5 comments
Read more