Lifestyle inflation is a popular personal finance metaphor for the phenomenon of expenses endlessly rising to match (or surpass) income. It captures the predicament of the 37% of Americans living in one of the world’s richest countries who claim to be too broke to save. And it describes what those pretending to poor want to avoid. Bloated spending not only causes financial problems, it also makes people less useful. It ties up time and money so that it all has to be spent on lifestyle maintenance, leaving less room for meaningful pursuits like family, friends, and volunteering. Plus, when life is centered on convenience and acquisition, people miss out on the satisfaction of becoming handy, resourceful, and helpful.
But those of us who don’t inflate our lifestyle also face potential danger. Have you ever thought about what you are inflating instead? We need to invest in something we can put stock in, and I don’t mean the stock market. If all you inflate is your bank or retirement account, you’re missing out. Saving and investing are worthy, responsible steps that we preach. But we all know there’s more to life than money. Most people think this “more” is freedom: from the 9 to 5, having to worry about money, or keeping up with the Joneses. Freedom is depicted as early retirement, working for yourself, traveling-hacking, or otherwise finding happiness outside materialism.
These are all appealing replacements to lifestyle inflation. But will they pay the dividends of a joyful and productive life? It’s easy to place false hope in the financial freedom or frugal ecstasy so often promised. A growing body of research documents the correlation between increased wealth and decreased interpersonal skills, emotional health, and happiness:
- Lonely At The Top, by Thomas Joiner, documents the tragic pattern of men achieving success and wealth, only to find themselves without companionship.
- In the Boston Globe article “Why It Matters That Our Politicians Are Rich” Britt Peterson reports, “Rich people have a harder time connecting with others, showing less empathy to the extent of dehumanizing those who are different from them. They are less charitable and generous. They are less likely to help someone in trouble.”
- Richard Ryan’s report in The Annual Review of Psychology (2001) found that a focus on financial and material goals correlated to a lower sense of well-being and found money is not a reliable predictor of happiness.
- Madeline Levine’s The Price of Privilege states the “newly identified at-risk group is preteens and teens from affluent, well-educated families.” These privileged kids are more likely to suffer from depression and other emotional ill health.
Yikes! There is a real gravity toward these scary outcomes for the wealthy. Pursuing wealth for different reasons doesn’t make us immune. Let’s heed these warnings and not let the journey to so-called freedom make us slaves to side hustles and financial goals. We want to remain flexible while increasing our financial flexibility, and the key lies in what we’re inflating along the way.
To us pretending to be poor is about inflating our usefulness at the same time we invest for future needs. Our financial journey isn’t just about us, or even our family. If we get to “retire” early, that’s just icing on the cake, because we’re using our time and money to build a good life NOW. And the good life is not just about geeking out over spreadsheets, net worth, and shopping at ALDI. It’s not just about finding happiness in frugal hacks and free pleasures. The good life is about helping others.
The outcome of inflating your usefulness isn’t to leave yourself destitute, but to “do good, to be rich in good works, to be generous and ready to share, storing up for themselves the treasure of a good foundation for the future, so that they may take hold of that which is life indeed” (1 Timothy 6:18, 19). So how can deflating your lifestyle inflate your usefulness?
- Work to live, don’t live to work. A good work ethic is important, but working constantly while ignoring family, friends, faith, and those in need is not a balanced or healthy life. If you’re hustling for the proverbial dangled carrot, maybe it’s time to free yourself from the rat race, not necessarily by retiring early, but by deflating your usefulness so you don’t need that carrot.
- Get useful by DIYing. Some people feel excited when they find the next new product that will make their life easier. Don’t get me wrong, I love my microwave and dishwasher. But others seek accomplishment in spending less, and this often results in becoming more useful. For example, I love Indian food, but I don’t love spending money at restaurants. So I’m learning to make Indian food. Neil enjoys riding his bike because it’s free exercise and saves on transportation costs. For both of us these money-saving measures are enjoyable in part because we feel accomplished after a challenge.
- Share the usefulness. Now that you have amassed helpful DIY skills, you can help other people. When someone need helps with a broken car or house, you can help. When someone loves Indian food, you can cook. You are saving other people money, perhaps teaching them useful skills, and feeling satisfied by widening your sphere of usefulness. Even if you don’t have amazing skills, simply by making time to help others you will find a world of needs to meet. Volunteering for an after school program, the high school group at church, to help a friend move, or to babysit are all ways we’ve found to be useful. Other ideas include volunteering at a nursing home or hospice center, Habitat for Humanity, Big Brothers Big Sisters, English tutoring for refugees, mentoring teens in prison, or taking a short-term missions trip. (I’m going to India this summer!)
- It is better to give than to receive. Freeing up money to give to charitable or faith-based causes is hugely rewarding, and, need I mention, helpful! For example, donating to disaster relief in Nepal would expand your usefulness to a global scale. Yes, you have to do a little research to make sure an organization is trustworthy. But there are lots of reputable places and you can check them out on charitywatch.org or ministrywatch.org. Or visit a local food bank, after school program, or homeless shelter and check it out yourself.
- Be a good friend. The research on sad, rich Americans should be sobering. Thankfully the antidote is simple and free: have friends. Caring about other people and sharing life together can keep you grounded and balanced throughout your financial journey. You’ll avoid ending up lonely at the top, and you’re bound to be useful if you’re a good friend.
Titus 3:14 describes usefulness well: “Our people must learn to do good by meeting the urgent needs of others; then they will not be unproductive.”
What DIY success are you most proud of? What have you learned from sharing your time or money with others?
What is the secret to true financial freedom?
I already said I don’t believe in financial freedom/independence. Most people define financial freedom as never having to worry about money again, living off investment income instead of work. For many the secret to achieving this means earning more; for a few it means living on less. For most it requires 40+ years of toil and fading faith in Social Security. But according to the Bible’s ancient insight the only real financial freedom comes from contentment.
Take it from a first-century Roman prisoner who wrote about financial freedom. I’ve visited the Mamertine prison and it’s just a dank, dark hole in the ground. So for the apostle Paul to write about contentment from there is shocking. He said, “I have learned to be content whatever the circumstances. I know what it is to be in need, and I know what it is to have plenty. I have learned the secret of being content in any and every situation, whether well fed or hungry, whether living in plenty or in want. I can do all this through him who gives me strength” (Philippians 4:11b-13).
Paul describes real financial freedom as being content whether you are rich or poor, whether you have too much or not enough. So often we think the key to curbing our spending is a new detailed budget, a cash envelope system, or more self-discipline. Any of these approaches could help, but we have to be operating from a basic position of contentment rather than feeling deprived. Otherwise we’ll feel self-pity because we’re constantly denying ourselves of good things. Contemporary marketing has done much to catalyze this false belief the human heart is already predisposed to.
If you’ve started implementing some of the practical ideas on this blog maybe you’re starting to feel deprived. Or maybe it doesn’t seem to make a big difference since skipping Starbucks isn’t paying dividends just yet. But feelings of self-pity, denial, or deprivation don’t make for good long-term motivation. Maybe you’ve experienced this with dieting. When it comes to money, marketing teaches that when you feel bad about yourself, you should buy something. “Treat yourself! You deserve it!” is the message of modern advertising, a marked change from “you need this” or “this will improve your life” techniques of yesteryear. The latter messages are now considered insulting to today’s consumer who is supposed to have achieved a fulfilled and happy life through materialism already.
When people today talk about financial freedom they mean you don’t need to earn money ever again. But countless celebrity stories have proven there’s never enough money to make you happy—because money isn’t what brings real satisfaction. Fulfillment in the richest sense come from following God by loving others. Because Paul was serving others even in prison, he could honestly say he was content, regardless of his financial circumstances. True financial freedom is trusting God to meet your needs, material or otherwise, as you work hard as a good manager of His resources.
Should we be content to stay in our current financial and work situation all our lives? By contentment I don’t mean complacent. The same author addressed this question in his historical context: “Were you called while a slave? Do not worry about it; but if you are able also to become free, rather do that. You were bought with a price; do not become slaves of men” (1 Corinthians 6:21, 23, emphasis added). No, the Bible does not support slavery, but we can’t get into that right now.
Today, we could apply this to employees. If your current work situation works, don’t worry about it. If work feels like soul-sucking slavery to The Man (and you don’t just have a bad attitude), then why not “become free”? Free means flexing that financial flexibility. Why not put yourself in a position where you can be content with lower expenses so you can consider doing work you’re more passionate about, or even just hate slightly less?
The average American sees 5 gazillion ads per day and this is a huge challenge to contentment. But you already know the secret–that material things will never make us truly happy and we need a lot less than we think we do. It’s actually quite fun to “pretend to be poor.” It’s fun to fix things up instead of buying new ones, which will probably crap out sooner because new stuff is poorly made. It’s fun to rock old clothes that you’ve kept so long they are finally back in style, and brag about how you’ve had them since high school. It’s fun to drive an older car and perform the lost art of cranking windows. “Pretending to be poor” is a whole lot more fun than pretending to be rich, with all the heartache and bank-ache that comes with debt.
A friend described the perspective change from deprivation to contentment this way: “I walk into Target and think, ‘I can have anything I want. I could buy whatever I wanted.’ And then I realize I don’t want any of that crap. Thinking this way takes the power [of discontentment] away.” Part of fostering this attitude is realizing how little value “that crap” adds to your life. The principle of diminishing returns is acutely applicable to material possessions. While our lifestyle is far from ascetic, it’s slightly less extravagant than average. This actually makes us more content and useful, as well as more flexible.
So what could you do with this flexibility? How about:
- Get out of debt.
- Have one parent stay at home with young children.
- Work for a church or non-profit for half your current salary.
- Volunteer full time to help those in need.
- Take your children on a short-term mission trip.
- Become a missionary.
- Substantially fund causes you care about.
- Choose a job based on your priorities rather than just the paycheck.
How do you combat the feelings of self-denial that come with spending less? What do you think of our definition of financial freedom?
As Thanksgiving approaches each year, I find myself contemplating America’s beginnings. We all know there are some serious social problems with this nation’s roots—I’m not going to get into that today. But why did so many choose to immigrate here?
Freedom & opportunity.
Religious freedom, economic freedom, political freedom, social freedom, and the freedom to take new opportunities.
Certainly America hasn’t always come through on these promises. But I find it more than a little ironic that here we all are, a 240 years later, discussing financial freedom as if it were a novel concept.
When did the American Dream turn into an over-sized house and two over-sized cars, for over-worked, over-whelmed, (sometimes over-sized,) in-debt rich people? That doesn’t sound like freedom to me. In fact, the Proverbs aptly proclaim that “the borrower is slave to the lender.” American’s $11.85 trillion dollars worth of personal debt is the very antithesis of the original dream. (Of that total, $890.9 billion is credit card debt.)
Check out this Financial Freedom Manifesto, delivered over a century ago to an audience of two, and recorded in the final chapter of the classic children’s book Farmer Boy. The main character, Almanzo, was offered an apprenticeship by the wagon-maker. This would have secured his financial future, but at a price the title farmer boy is unwilling to take:
“You’d have to depend on other folks, son, in town. Everything you got, you’d get from other folks. A farmer depends on himself, and the land and the weather. If you’re a farmer, you raise what you eat, you raise what you wear, and you keep warm with wood out of your own timber. You work hard, but you work as you please, and no man can tell you to go or come. You’ll be free and independent son, on a farm.”
As I read this to our four-year-old, I couldn’t help but think of the Financial Independence/Early Retirement movement. Farmer or not, people are longing for a long-gone freedom and are paying off debt, becoming self-employed, or “retiring” early to reclaim it.
My husband, an engineer by day and wannabe-farmer by evening, certainly resonates with some of this sentiment. As a diehard Little House fan, I hardly have grounds to disagree. But we both noticed the statement suggests the myth of the overly independent American. The apostle Paul improves upon Wilder’s description in his own Financial Freedom Manifesto:
“I have learned to be content whatever the circumstances. I know what it is to be in need, and I know what it is to have plenty. I have learned the secret of being content in any and every situation, whether well fed or hungry, whether living in plenty or in want. I can do all this through him who gives me strength.” (Philippians 4:11-13)
The True Secret to Financial Freedom is contentment. And what’s the secret to contentment? According to Paul earlier in the chapter, it’s gratitude and—not total independence–but dependence on the One who can meet our needs despite any circumstance:
Do not be anxious about anything, but in every situation, by prayer and petition, with thanksgiving, present your requests to God. (Philippians 4:6).
Secular sources are discovering this same truth. Just yesterday this New York Times piece highlighted research that demonstrates choosing to act grateful makes people feel happier.
So as we approach this Thanksgiving, let us reflect on the original American Dream, which was about freedom and opportunity rather than excess and consumerism. I’m not sure how the meaning of the holiday morphed from being thankful for survival to Black Friday hype, but let’s take a moment this year to be content with the food and covering that we have (1 Timothy 6:8). Let us thank the One who has entrusted us with these good gifts (James 1:17) and the many advantages we enjoy. After all, if you’re reading this weblog, you’ve most likely won the lottery of life.
Let us find the freedom that comes from contentment, discarding the nightmare of greedy materialism and the chase for an elusive “enough.” Here’s how I plan to celebrate the freedom of gratitude this Thanksgiving. I invite you to do the same:
Write down what you’re grateful for this week. Next time I catch myself comparing, complaining, or grumpy, I’ll look back on my Thankful List and–you guessed it–be thankful.
Give to the needy. One way to give thanks is to acknowledge how much we’ve been given and then to share. This year, my four-year-old son initiated a food drive “for hungry people.” I’ve been humbled by his reminder that not everyone has enough, and it’s worth working hard in part to have something to share (Ephesians 4:28). He’s been enduring “boring” chores like vacuuming and putting away silverware in order to earn money to buy food for the drive. Of course, there are many ways to give to the needy this holiday season, but I encourage you to volunteer time, money, food, talent, or whatever you have to give someone else a reason to give thanks.
Tell someone you love how much they mean to you. Too often we equate “thank you” with a pleasantry, and our expression of gratitude never goes beyond a polite recitation. Whether in person, on the phone, or in a hand-written note, find a way to dig deeper than a ritual and surprise someone with thankfulness that is specific, personal, and heartfelt.
Looks like we’ve all got our work cut out for us! I’ll let you get to your thanks-giving.
What are some other ways to keep the meaning of Thanksgiving in focus? Why do you think the “American Dream” shifted over time?