An Example of Lifestyle Inflation

Here's an illustration of how lifestyle inflation works: Imagine a college student named Gal. In college, Gal worked odd jobs as a server and a library assistant to make ends meet. Gal shared a three-bedroom apartment off-campus with two other students and subsisted on sandwiches and ramen noodles to trim costs.

After graduating from college, Gal found employment at a bank in the city. New job secured, Gal moved out of the shared apartment and into a studio. Without roommates to split the rent, Gal's monthly housing costs increased. Gal also adopted a pet and joined a boutique fitness club, two luxuries that weren't possible as a student but which further increased monthly expenses. And with a little more free time, Gal took the opportunity to taste the cuisine at the city's best, Michelin-starred restaurants—quite a bit more expensive than sandwiches and ramen.

Here's an illustration of how lifestyle inflation works: Imagine a college student named Gal. In college, Gal worked odd jobs as a server and a library assistant to make ends meet. Gal shared a three-bedroom apartment off-campus with two other students and subsisted on sandwiches and ramen noodles to trim costs.

After graduating from college, Gal found employment at a bank in the city. New job secured, Gal moved out of the shared apartment and into a studio. Without roommates to split the rent, Gal's monthly housing costs increased. Gal also adopted a pet and joined a boutique fitness club, two luxuries that weren't possible as a student but which further increased monthly expenses. And with a little more free time, Gal took the opportunity to taste the cuisine at the city's best, Michelin-starred restaurants—quite a bit more expensive than sandwiches and ramen.

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