What Does Lifestyle Creep Mean?
According to Investopedia “Lifestyle creep occurs when an individual’s standard of living improves as their discretionary income rises and former luxuries become new necessities. The rise in discretionary income can happen either through an increase in income or decrease in costs. A hallmark of lifestyle creep is a change in thinking and behavior that sees spending on nonessential items as a right rather than a choice. This can be seen in the spending decision attitude of “you deserve it,” rather than thinking of the opportunities that saving money would provide. A way to fight lifestyle creep is by budgeting and discerning wants from needs when making purchases. Lifestyle creep is the thought that one must go out and spend more money as one gets more earnings.”
In other words, making more money does not mean that you must go out and spend more money. You don’t owe it to yourself to treat yourself every time you get an extra 2 dollars. No, you owe it to yourself to optimize those dollars to work for you and improve your life. In fact, the money you spend does not in itself guarantee you a good time or great company.
Furthermore, if the amount you spend dictates the quality of your company, then perhaps you need to find some new company. Just my two cents, you don’t have to listen to my advice. I won’t judge you. I also won’t be listening to your complaints when you do inevitably complain about the “system”. I am not saying that there are not factors that may be working against your growth, but perhaps your way of handling your extra cash may also be working against you. Some of us must learn the hard way. Believe me, I am one of them. Like I said, no judgements here, just advice.
Think about what you really want to achieve, then write them down. You know how I love to have written and not abstract goals. It doesn’t mean I will do them, but it at least keeps me focused.
SO, YEA umm… lifestyle creep and STRATEGIES to AVOID it.
- Make a budget
- Don’t get memberships you don’t use. I have done so with the gym memberships and Costco’s. I am so ashamed. Nope I’m not! I just got older, wiser and stopped buying things that my imaginary self uses.
- Don’t buy clothes you won’t wear. Not because they’re pretty. Buy them when you need them.
- You don’t have to indulge yourself with every new gadget that comes out.
- Develop a side hustle and stack the money.
- Don’t indulge in fancy vacations you can’t afford. Trust me, there are cheaper ways.
- Save and invest more each year as your income increases. So, if you know you will be getting an increase of 2%, add that to you IRA, 401K or your savings account. You can even hide it under your bed if you wish but I wouldn’t advise it since you won’t benefit from compound interest. You know the gift that keeps on giving.
- Did I say make a budget? I also meant stick to it. A budget only helps if you follow it.
- Live like you were in a college dorm. No fancy furniture. No shmancy meals.
- Do not try to keep up with the Joneses or the Kardashians. It’s a slippery slope.
It’s very easy to fall victim to lifestyle creep no matter who you are. Whether you grew up poor and have never had access to large sums of money or you grew up with money & always assumed that your birthright would always be there, it can affect you. To my friends reading this, just know that its ok. Take a breath, 🙂 and try to avoid these pitfalls that can affect your wallet.