Still having problems after a pay rise? Lifestyle inflation could be the culprit

So how can you enjoy a higher income without falling victim to lifestyle inflation? Both Manot and Kothari offer practical advice. Kothari stresses, “Start by saving and investing every month.” She suggests setting aside money for savings and investments right away to build a solid financial foundation. “Investing is a lot about emotions and behavior,” she said. Manot stresses the importance of aligning spending with long-term goals. “Creating a budget that reflects your financial goals can help you see the bigger picture,” she said.

Vishal Dhawan, CEO of Plan Ahead Wealth Advisors, suggests other strategies: “If your SIP is Rs 10,000 now, increase it by 5% with every salary hike and don't forget to factor in inflation in your spending. Balance pleasure and financial discipline,” he advises. Dhawan also suggests using surplus income to pay off debt first, then increase savings and invest in areas that support self-care. Prioritize paying off high-interest loans and avoid accumulating unnecessary debt.

The next time your salary goes up, find a balance between enjoying the extra money and being smart about your finances. After all, a little fun combined with a lot of foresight will ensure you're financially happy.