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

Comments

Random Birthday thoughts

As I would have cribbed @ 1000000000 words per day, I am currently at a place called Jhunjhunu where I have no social life to speak of, internet is the only thing that keeps me going, apart from few random movies or episodes of Seinfeld. So prospects of celebrating birthday in this solitary confinement are not that exciting! Too add to that, as I switched on my laptop yesterday night, I realized that it had conked off and is showing fan error as the reason. For me this was the end of world. And I knew not how would I survive! I hoped the issue will get sorted out in a week but it is too much to ask in this small town and this time period seemed to be an extremely optimistic guess. My birthday eve and early morning were spent on developing strategies on how to get it repaired. I couldn't find any IBM authorized dealer here, and I would have needed to send it to Delhi. There were two options - first was about sending it as a parcel to one of my friends at IBM , either directly or i...

Financial tips for a 25 year old

Originally published at BeingfinWise __ If you are 25 year old, there is a good likelihood that you would have started working or are likely to start soon. And hopefully start(ed) managing your own finances. So, what do you do next? The good news is that having a profession can soon lead to cash flows which perhaps wouldn't have seen in your student days. And that can be empowering in many ways. The bad news is that, if you are reckless with spending money, it can soon lead to a downward financial spiral. Managing your finances well can be a good first step towards a healthy financial life. And it starts with small steps.

Expenses that can set your financial plans back

Originally published on BeingFinWise __ It is good to have a financial plan. It enables you to have financial resources ready when you may need them. At the same time, it enables you adapt your lifestyle in alignment with the desired goals. But the ride is not always as straightforward as the excel sheets with projected expenses & rate of returns suggest. There can be several factors that can set back your financial planning, even by several years. While one may not have a foolproof mechanism against all eventualities, one can definitely mitigate the impact of several uncertainties by having proper safeguards in place. Here are some factors that can set your financial plan back by several years

How to make best use of credit cards?

You can also read this on BeingFinWise __ Credit cards can be an amazing tool to manage your finances, get good deals and some excellent rewards. All you need to do is understand some credit card hacks and be on lookout for deals! However, before starting on how can you make the best use of credit cards, you need to be sure if credit cards really suit you or do you tend to lack financial discipline if you have access to credit cards. If this is the case, it may be wiser to avoid credit cards altogether. (You may also be interested in - You should stop using credit cards now if ... ) Here are 5 ways you can get the best out of credit cards.

Get cashback while doing online shopping

Originally published on BeingFinWise __ Cashbacks are an amazing way to save money while shopping. More so while you do online shopping. In addition to regular deals and discounts, you can get cashback if you go via affiliates . This way you can get cashback on your online shopping, over and above your regular deals. Some of the popular affiliate networks offering cashback on online shopping in India are Cashkaro , Gopaisa , Pennyful etc.

Random Ramblings

Search This Blog