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Are you in your 20s or 30s, earning a decent wage – perhaps around $80,000 a year – but still feeling financially stressed? You're not alone. It's a surprisingly common scenario. While previous generations might have dreamed of earning such a salary, many today find themselves trapped in a cycle of spending, despite a comfortable income.

The problem isn’t necessarily the salary itself, but rather how that money is being managed. A finance coach sheds light on the culprits behind this frustrating situation – lifestyle inflation, the allure of digital convenience, and the trap of impulse purchases.

The Lifestyle Inflation Trap

As our incomes rise, it's natural to want to enjoy the fruits of our labour. However, it's easy to fall into the trap of 'lifestyle inflation.' This means increasing your spending in line with your income. A bigger apartment, a newer car, more frequent restaurant meals – these upgrades can quickly eat into your savings potential. The key is to be mindful of this tendency and consciously choose where to allocate your extra income. Ask yourself: 'Is this upgrade truly adding value to my life, or am I just keeping up with appearances?'

The Digital Convenience Factor

We live in an age of unprecedented convenience. Streaming services, food delivery apps, online shopping – all designed to make our lives easier, but often at a cost. Subscriptions, delivery fees, and the ease of impulse buying online can silently drain your bank account. Regularly review your subscriptions and be honest about which ones you truly use and value.

The Impulse Purchase Pitfall

Impulse purchases – that spontaneous buy of something you didn't really need – are another significant drain. The dopamine rush of a new purchase is fleeting, and the regret often follows. Before making a non-essential purchase, take a moment to pause and consider: Do I really need this? Can I afford it? Waiting 24 hours before buying anything outside of essential groceries can be a surprisingly effective strategy.

Taking Control of Your Finances

So, how do you break free from this cycle? Here are a few actionable steps:

• Create a Budget: Track your income and expenses to understand where your money is going. There are plenty of budgeting apps available to make this easier.
• Prioritise Savings: Treat savings like a non-negotiable bill. Automate transfers to a savings account each payday.
• Set Financial Goals: Having clear goals – buying a house, travelling, retirement – provides motivation and direction.
• Review Your Spending Habits: Regularly assess your spending and identify areas where you can cut back.
• Seek Professional Advice: A financial advisor can provide personalised guidance and help you develop a long-term financial plan.

Earning a good salary is a fantastic achievement, but it's just the first step towards financial freedom. By being mindful of your spending habits and taking proactive steps to manage your money, you can turn that salary into a secure and fulfilling future. Don't let lifestyle inflation, digital convenience, and impulse purchases steal your financial peace of mind.