7 Steps to Reduce an Extravagant Lifestyle and Save

Introduction

Managing your finances can be a challenge, especially when social pressures and rising incomes tempt you to spend more. Learning how to reduce an extravagant lifestyle is the first step toward long-term wealth and stability. By implementing structured budgeting techniques and auditing your habits, you can shift from living paycheck to paycheck to building a secure future. In this guide, we explore why lifestyle inflation happens and provide actionable strategies to regain control of your wallet.

Why Does ‘Lifestyle Inflation’ Hit People in Their 20s?

Your 20s are a dynamic time. On one hand, you’re starting to feel a sense of financial freedom you’ve never had before, but on the other, you’re also vulnerable to various temptations that can eat away at your financial health.

The Trap of First Salaries and Promotions

Getting that first salary or a promotion feels amazing. After working so hard, there’s finally a tangible financial reward. The temptation to immediately ‘celebrate’ by buying dream items, upgrading gadgets, or taking luxury vacations is often irresistible. Without realizing it, this income increase actually triggers a more expensive lifestyle rather than an increase in wealth. It’s like a trap: the higher the income, the higher the desire to spend it rather than save it. This phase is often the starting point for needing to know how to reduce an extravagant lifestyle because many get complacent with their rising income.

Social Pressure: Social Media FOMO vs. Reality Check

Social media today is a lifestyle showcase. Photos of exotic vacations, expensive meals, and branded items scroll by constantly. The phenomenon of FOMO (Fear Of Missing Out) is incredibly strong among young adults in their 20s. It feels ‘not cool’ if you don’t follow the trends, don’t have the same items as your friends, or can’t hang out at the hottest spots. In reality, what’s shown on social media is often just a ‘stage,’ not the actual financial reality. This social pressure often forces us to spend more than we can afford just to maintain an image.

Needs vs. Wants: The Thin Line That Often Blurs

Your 20s are a transition period. You’re becoming independent and have more complex wants and needs. However, the line between needs and wants often gets blurred. The latest phone might not be a basic necessity, but a ‘want’ to stay up-to-date. An expensive cup of coffee every morning might feel like a ‘need’ to start the day, even though it’s an impulsive expense. Understanding this difference is crucial to start controlling ballooning expenses and is an essential part of learning how to reduce an extravagant lifestyle.

7 Concrete Steps to Reduce an Extravagant Lifestyle

This is the core of our guide: concrete steps you can take to control your spending and start building healthier financial habits. Changing an already extravagant lifestyle takes commitment, but the long-term results are well worth it. Mastering how to reduce an extravagant lifestyle isn’t just about cutting expenses; it’s about building financial awareness.

Total Expense Audit of the Last 3 Months

The first step is knowing where your money is going. Gather transaction data from your bank, digital wallets, and receipts from the last three months. Categorize every expense: food, transportation, entertainment, shopping, subscriptions, etc. You’ll be surprised to see how much money is actually spent on things that aren’t that important. This is the foundation of every strategy for how to reduce an extravagant lifestyle.

Cancel Unused Subscriptions

Check your monthly or yearly subscription list. Music streaming, movies, premium apps, or gym memberships you rarely visit. Many of us subscribe to services that we rarely or even never use. Each small subscription might seem trivial, but when added up, they can significantly drain your pocket every month. Canceling unused subscriptions is a quick way to save and a key part of how to reduce an extravagant lifestyle.

Apply the ’24-Hour Rule’ Before Checking Out

Impulsive shopping habits often strike suddenly. Seeing a discounted item, a tempting new gadget, or fashionable clothes can trigger an immediate urge to buy. To fight this, apply a simple rule: delay the purchase decision for 24 hours. After 24 hours, ask yourself: Do I really need this? Will this add long-term value to my life? If the answer is hesitant or no, it’s likely just a passing whim. This is one of the most effective techniques for how to reduce an extravagant lifestyle.

Switch to Cheaper ‘White Label’ Alternatives

Many well-known branded products have quality comparable to ‘white label’ or lesser-known brands but at a much more affordable price. From basic necessities and household supplies to cosmetics. Do a little research, read reviews, and compare the quality. Sometimes, the main difference is just branding and packaging. This is a smart strategy in how to reduce an extravagant lifestyle.

Limit Excessive ‘Self-Reward’ Frequency

Celebrating small achievements with a treat for yourself is important. However, if this ‘self-reward’ is done too often or is too expensive, it can backfire. For example, buying new clothes or a fancy dinner every time you finish a small task. Try replacing ‘self-reward’ with something simpler that doesn’t burden your finances, like reading a book, a relaxing walk in the park, or watching a movie at home. Remember, the goal is to build a habit of saving, not to punish yourself excessively. With good ‘self-reward’ management, you can focus on the main goal of how to reduce an extravagant lifestyle.

Create an Automated ‘Saving Plan’ for Specific Goals

Saving often feels difficult because there’s no clear objective. Create a specific saving plan. Whether it’s for retirement, a house down payment, a dream vacation, or simply an emergency fund. Then, automate those savings. Set it up so a portion of your salary is directly transferred to a separate savings account as soon as you get paid. This way, you won’t be tempted to spend money that has already been allocated for the future.

Use Simple Financial Tracking Tools

Recording every small expense, like parking, snacks, or daily coffee, can be tedious. However, this is precisely where financial leaks often occur. Using a financial tracking app like MoneyKu can be very helpful. With MoneyKu, you can quickly and easily record every expense, categorize it, and see a visualization of where your money is mostly spent. This makes the process of using a daily expense app hassle-free and provides a clear picture for your 50/30/20 budgeting method strategy. This is a vital element of how to reduce an extravagant lifestyle.

Realistic Scenario: From ‘Impulsive Spender’ to ‘Savings Expert’

Let’s see how a lifestyle change can have a real impact. Small, consistent changes often lead to massive results in the long run.

Before:
Andi, a fresh graduate, has a monthly salary of Rp 7,000,000. His daily habit is buying trendy coffee for Rp 35,000 every morning (Monday-Friday, 20 working days = Rp 700,000/month) and frequently eating out or ordering food after work (average Rp 50,000/day, 20 working days = Rp 1,000,000/month). Not including weekend hangouts which can cost another Rp 500,000-Rp 1,000,000. Total monthly wasteful spending can reach Rp 2,200,000 – Rp 2,700,000 just for coffee and food, not including other expenses like phone credit, entertainment subscriptions, and impulsive shopping. Consequently, by the end of the month, his wallet is often ‘in the red’ and it’s hard for him to save.

After:
After reading the guide on how to reduce an extravagant lifestyle, Andi decided to change. He started cooking his own breakfast and packing lunch (saving Rp 1,200,000/month), and reduced expensive hangouts by replacing them with free activities like cycling or gathering at a friend’s house (saving Rp 500,000/month). His coffee was replaced with high-quality instant coffee made at home (saving Rp 500,000/month). Andi’s total savings reached Rp 2,200,000 per month! With these savings, Andi can now start saving regularly for an emergency fund and plan for his future. This change is clear proof that how to reduce an extravagant lifestyle is about priorities.

Fatal Mistakes: Why Saving Intentions Often Fail Miserably?

Many people are enthusiastic at first when they intend to save, but the plan often fails halfway through. Why does this happen?

Extreme ‘Cut-off’ Methods That Trigger Revenge Spending

Deciding to never buy snacks at all, never buy new clothes again, or avoid all forms of entertainment can feel like a punishment. Our bodies and minds will feel ‘pressured’ and eventually trigger ‘revenge’ behavior. You might suddenly go on a binge, buying all the items you’ve been holding back on, spending even more money than before. The key to how to reduce an extravagant lifestyle is balance, not self-torture.

Ignoring Small Expenses (Leaks) Like Parking or Bank Fees

We often focus on large expenses like mortgage payments, tuition fees, or luxury vacations. In fact, the most common financial leaks come from small items that are often forgotten: daily parking fees, bank transfer fees, small amounts of phone credit used unconsciously, or forgotten free trial subscriptions. These small expenses, when accumulated, can be massive. It’s important to have a system to track them so you truly understand how to reduce an extravagant lifestyle comprehensively.

Trying a Minimalist Lifestyle Just Because It’s a Trend

Seeing a friend or influencer adopt a minimalist lifestyle and immediately jumping on the bandwagon without truly understanding the reason often ends in failure. Minimalism or saving done without deep conviction will feel hollow and difficult. It’s important to find personal financial motivation and goals that drive your decision for a frugal lifestyle. Adopting how to reduce an extravagant lifestyle must come from within.

Frequently Asked Questions About Lifestyle

Here are some common questions that might haunt your mind when trying to change an extravagant lifestyle.

How do I say ‘no’ when invited to an expensive hangout?

Just be honest! You can say, “Sorry guys, I’m focusing on saving right now, so I’m being really frugal. Maybe next time we can find a more casual alternative?” or “I have a savings target right now, so I can’t join the expensive stuff for a while. But keep me updated if there’s another event!”. Most good friends will understand. If they don’t, it might be a sign that you need to re-evaluate your circle of friends. Maintaining healthy friendships is also part of financial balance.

Do I have to stop buying coffee completely to save?

Not necessarily! The key is moderation. If trendy coffee is your source of happiness and you don’t mind reducing another category slightly, maybe you can reduce the frequency. For example, from every day to 2-3 times a week, or switch to a more affordable coffee. What’s important is being aware of the cost and its impact on your financial goals. This is part of the art of a guide to enjoyable frugal living. Understanding that how to reduce an extravagant lifestyle isn’t about eliminating pleasure, but managing it.

What percentage of salary is ideal for lifestyle?

This varies greatly depending on individual goals and conditions. However, as a general guide, many financial experts recommend the 50/30/20 budgeting method. This means 50% of your salary for basic needs, 30% for wants, and 20% for savings and investment. For those in their 20s who want to build a solid financial foundation quickly, a target of saving 20% or more is highly recommended.

When is the right time to raise your standard of living again?

After you’ve reached important financial goals, such as having a sufficient emergency fund, paying off consumer debt, or having stable investment savings. Increasing your standard of living should be done gradually and in line with income growth, rather than lifestyle inflation that precedes a salary raise. This is a healthy cycle to ensure your savings stay safe while you continue to practice how to reduce an extravagant lifestyle wisely.

Conclusion

Taking the step to understand how to reduce an extravagant lifestyle is a powerful move for your future. It requires discipline and a shift in mindset, but the reward of financial freedom is priceless. By integrating better financial planning habits and staying consistent with your goals, you can enjoy a high-quality life without the stress of being broke. Start small, stay consistent, and watch your savings grow as you master the art of intentional spending.