How to Avoid Lifestyle Creep



        Did you buy a new car after getting a higher paying job? Booked a luxury vacation when you received a promotion? Are you currently making more money than ever before but it still feels like your living paycheck to paycheck? Unable to increase your savings or decrease your debt? If this sounds like you, you may be a victim of lifestyle creep.

What is lifestyle creep?

        According to Investopedia, ‘lifestyle creep refers to the phenomenon where discretionary consumption increases on non-essential items as the standard of living improves. With lifestyle creep, luxury goods and discretionary spending become perceived as a right to have and not a choice—as a necessity versus a want.’ If you’re a little wide-eyed after that definition, no worries, to put it simply lifestyle creep is the act of increasing your spending, often too much, as you earn more money.

        It’s referred to as lifestyle creep because it tends to happen gradually and isn’t always immediately noticed. But lifestyle creep can be one of the biggest threats to achieving or maintaining financial stability.



Why Does Lifestyle Creep Happen?

        Lifestyle creep generally happens because we found ourselves with more disposable income and no real plan on what to do with it. This leads to mindlessly spending more on things that we don’t necessarily need even though we convince ourselves we do, because we have the money right? Another cause of lifestyle creep is our belief that we deserve a better lifestyle and our misconceptions that the only way to obtain or achieve this is by acquiring bigger, better, and most likely more expensive things.

        Lifestyle creep can manifest itself in many ways. There are the larger more obvious cases of lifestyle creep;
  • Purchasing a new car although there may be nothing wrong with your current vehicle.
  • Feeling the need to move into or purchase a larger place even though your household size didn’t increase.
        But there are also the smaller, more subtle aspects of lifestyle creep that aren’t as apparent but are just as detrimental to your path towards financial freedom. Some examples of more subtle lifestyle creep can include:
  • Purchasing a new cell phone every time a new model is released.
  • Signing-up for subscriptions (gym memberships, streaming services, apps) that you never use or don’t necessarily need. Anyone else paying for a Massage Envy? Or it is just me. 😖
  • Feeling you can only buy brand names. I don’t always fall into this trap but I’d be lying if I didn’t admit I can be guilty of this from time to time. After using Charmin ultra-soft toilet paper, Scott’s just doesn’t do it for me anymore. 😂
  • Increasing the frequency of already established spending habits. For example, I wasn’t that big on ordering takeout, maybe getting it 2 to 3 times a month but as I started to make more money I could see the frequency in which I ordered out increase. I was now ordering takeout at least once a week if not more.
        Understanding what lifestyle creep is and that it exists is the first step in making sure it doesn’t knock you off your path to financial freedom. I included some tips below to help you avoid its slippery slope.



Tips to Help Avoid Lifestyle Creep:

Know Your Goals and Plan Ahead
  • The most effective way to avoid lifestyle creep is having/knowing your financial goals. If you don’t have a clear goal in place, creating a plan for your money will be essentially impossible; and without a plan the odds of you spending your money frivolously increases. 
  • Having financial goals keeps you focused. It also gives the additional money you’re making a clear purpose. For example, if you received a promotion and are now bringing in an additional $100, with a financial goal/plan in mind you may have already decided to put this entire amount (or at least a portion of it) to whatever your goal may be. Without a goal/plan you may find that your added funds are now more stuff in your closet that you don’t need, additional subscriptions that you don’t use, or even nights out of the town that you can’t remember.
  • So be sure to set financial goals. This will vary from person to person based on your financial needs and may change over time. But, determining your goal(s) early and creating a plan, makes it more difficult for lifestyle creep to claim your extra funds.
Treat Yo’ Self, But Be Smart About
  • There is nothing wrong with treating yourself. I’m actually a big proponent for it. We work so hard for the money we earn, we should be able to reap the benefits every once in a while by rewarding ourselves with the things we like. However, when it comes to treating yourself make sure you are being smart about it. Instead of going on shopping sprees pick the one thing that you really want and buy that. Instead of doing impulse buys, wait a few days or weeks to see if you’re still thinking about or are even interested in that item. You can have nice things without completely falling into the lifestyle creep trap if you learn to shop more consciously.
Just Because You Can Afford it, that Doesn’t Mean You Have To Buy It
  • I’m going to state this again, Just because you can afford it, that doesn't mean you have to buy it. You don’t know how many times I have been teased for not spending my money on certain things even though I could afford it. However, being able to afford something is not a reason to buy it. This thought process is an easy way to sabotage reaching your financial goals. If you’re spending your money on something make sure it makes sense for you and that it is useful to you. Case in point, my current laptop is slowly dying. My laptop is 5 years old and before starting my blog its only purpose was paying bills and shopping online. A friend of mine suggested I purchase a Macbook. After looking up prices, Macbooks can easily cost about $1200 or more especially if they are new. Now could I afford a Macbook? Yea, but that didn’t mean I wanted to buy one.
        Bottom line: Lifestyle creep is real and it has the potential to ruin your finances and keep you in a stagnant place economically. Don’t let this happen to you. Be mindful, and avoid lifestyle creep.

Comments

  1. Very eye opening and informative post, thank you for sharing!

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  2. Thank you for sharing this informative post.

    Lauren | www.bournemouthgirl.com

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  3. OMG! I just had this conversation with a friend the other day! I was telling them they shouldn't buy something just because they can afford it. They didn't listen to me but ����‍♀️ such is life. I am constantly re working my finances. I got rid of a lot of extra expenses. I still find myself impulse buying sometimes. But now I'm working on multiple streams of income. I want to stop living paycheck to paycheck. But it's really not my spending (any more ��) and more so that the cost of living is constantly increasing and my pay isn't increasing as quickly. Therefore, I need to start making a supplemental income. But know about this lifestyle creep will help me steer clear of unnecessary spending! Thanks for the article!

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    1. Hey Britt! I know it can be frustrating when you're trying to help a friend make better financial choices but getting people to change their mindsets towards money is easier said than done.
      Yes! Having multiple streams of income is always a plus. The cost of living is steadily increasing and sadly pay increases aren't happening as frequently to keep up. You have to right mindset though, keep it up and as always thanks for the comment!

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  4. This was fascinating -- I definitely have aspects of this in my life at various points so now I feel ready to spot it and deal with it better. Thanks for sharing!

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    1. Thanks for the comment Molly! Being able to spot and point out lifestyle creep is a great skill to have. Your future self and finances will definitely appreciate it!

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  5. I had never thought about this before but it's so true. I do see some of it in myself though I've been careful to increase my savings each month by a larger amount as my pay has increased.

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    1. Thanks for the comment Lisa! Lifestyle creep is a term that I just learned a few months ago although I saw it's effects way before I knew what to call it. I, too, have used savings and paying off debt as a way to avoid Lifestyle creep.

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  6. I’ve never heard the term lifestyle creep but I love it! Haha

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  7. This was a great post. I fine it happening to me all the time. When I started to make more money and it's easier to pay ur bills then u see what u have left over and start to spend spend spend. But I have learned that is better to have a saving a back up and all of that. I learned a lot of that from this blog!

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    1. Thanks Ez I really appreciate the feedback! Trust you are not the only one, when you start to make more money it's easy to fall in the habit of just spending, spending, spending. But the goal of making more money is to get us out of living paycheck to paycheck and on a road to financial stability, that's why I think it's important to educate people about Lifestyle Creep so they won't fall into the trap.

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  8. This is super helpful especially when I was totally unaware that I was even doing this to myself most of the time. I appreciate this post so much, thanks for sharing the help!!!
    xo Bri

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  9. Hi SDot. I couldn't agree more. I'm often amazed when I hear people on huge salaries say that they have nothing left at the end of the month - it's as if the objective is to spend it all on non-essentials. I think my wife and I were at the other end of the spectrum - we still had little money left over each month in the early days but that was because it was all diverted to paying off the mortgage early and funding personal pension schemes. Each to their own!

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    1. Thanks for the comment Richie! I agree, I think it's because a lot of people are under the impression that if you make more you have to spend more. I wish people could break this mindset.

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