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Acting rich is a good thing. Acting how you think rich people act is a bad thing. One of the most common misconceptions about rich folks is that they spend their money frivolously because they are so wealthy that they don’t have to worry about it. While it is true that some wealthy people, professional athletes in particular, live an over-extravagant lifestyle, the majority of rich people got to where they are by living below their means and persistently investing money. Once you learn to act rich, you will hear the phrase, “You spend money like a millionaire”, and take it as a compliment.

I first heard of lifestyle inflation in an article at the wonderful personal finance blog, Budgets Are Sexy, and it really got me thinking. Having gotten a raise at each new job I’ve worked at, shouldn’t my rate of saving increased exponentially.

If I was as financially savvy back then as I am now, I would venture to say that the answer would be yes. Then why am I not saving as much as I could be?

The answer is lifestyle inflation.

Buy everything you want. That’s it, that’s the secret. It seems obvious, but the more you look at it, the more you’ll realize that you do it every day.

See that laptop over there? Charge it, you’ll pay it off eventually.

See those new designer shoes? It’s buy one get one half off right?

You might as well get the extra large drink, after all, it’s only $1 more.