“Lifestyle creep” happens when you gradually begin to spend and splurge more, and things you once saw as luxuries become a necessity in your mind. This way of thinking leads you to miss opportunities to save money, and it can also lead you into living a “champagne lifestyle on a lemonade budget” if your earnings decrease but your habits are locked in.
The good news is that there are plenty of ways to avoid this phenomenon and be savvy with your hard-earned money. Here are five tips for avoiding lifestyle creep:
1. Learn To Budget
Budgeting is such a basic practice, and yet it is so easy to go with the flow and forget about doing it, especially when you have more money coming in. To budget in a way that will help you avoid lifestyle creep, it’s essential to:
- Use a tax calculator and ensure you’ve got enough money set aside for your tax bill;
- Create a monthly spending allowance;
- Invest consistently;
- Build up a rainy day fund.
This will help you remain conscious of the way that you use your money. You can live the life you love while simultaneously working on big, meaningful goals.
2. Avoid Runaway Debt
Lifestyle creep can get so bad that you end up living beyond your means and running up debt. This could be minor, but if you’re leaning into luxury, it could get seriously out of control. Runaway debt is terrible for your credit, and the side effects of bad credit are significant.
3. Take Control Of Your Spending
Statistics suggest that consumers overspend by more than $7,000 a year on nonessentials like junk food and online subscriptions. By controlling your spending, you can not only protect yourself from debt, but you can start to put that money into saving for big goals. A great way to do that is to have a direct debit to savings accounts and pension pots, so you don’t even have the chance to fritter away your earnings on lifestyle luxuries.
4. Don’t Upgrade Your Life On A Whim
Lifestyle creep can happen quickly if you rush out to make big upgrades the moment you start earning more money. Whether it’s a new car purchase, moving to a more expensive rental property, or splurging on a fancy holiday, one expense generally leads to another, catching you in a vicious cycle. This kind of behavior can instantly suck up new funds.
When you start earning more, give yourself at least six months to consider any significant expenditures. This will give you time to make an informed and strategic decision rather than an impulsive one that leaves you financially vulnerable.
5. Don’t Fall For Comparison Culture
Many scientific studies show that we construe our self-worth in relation to others, often to our detriment. When it comes to lifestyle creep, it may be that you’re seeing polished posts on social media and thinking you should also be living that way. We live in a consumerist society, so it can be difficult to avoid feeling as though you need to spend, spend, spend to live a life of value.
Remember that social media is just a snippet of real life, and often, it isn’t real at all. Consumerism is also driven by the profits of huge organizations, not the true needs of society. Read about minimalism in its truest form, and take breaks from social media. A meaningful life does not need to be an expensive one.
Lifestyle creep is a challenge to avoid when you’re earning more, but a quick switch in perspective and some supportive habits can help you find greater fulfillment without spending more.
