How to Prevent Lifestyle Creep

Lifestyle creep is a situation that we have all experienced at one point in our lives but not fully understood.

Lifestyle creep, in its simplest form, refers to a case where, when an individual starts earning more money, their expenses and needs rise alongside. This situation keeps people at the same level for years with them wondering how come they don’t have enough saved up even though they are earning way more than before.

We have all been guilty of this at one point in our lives or another. Just going by how the human mind works, it only makes sense to start spending more money on all the things that we have always wanted, when we start making more money.

When this happens, things that we previously wanted, magically turn to needs and we feel like we just absolutely need to have those items or things.

If we aren’t careful, we quickly realize that we have more cars than we drive, more pairs of shoes than we wear, more skincare products than we need and the list goes on.

This is a vicious cycle that keeps going and eating away at our finances and before we know it, it all eventually crashes. Being aware of this situation is a good starting point to curbing its effects.

It’s important to realize that lifestyle creep prevents us from saving as much as we should, investing as much as necessary, and most importantly, it leaves us poorer than we started.

And the crazy thing about lifestyle creep is that it doesn’t really matter how much you earn. You might always keep living paycheck to paycheck or taking on a large amount of unnecessary debt!

Now, how do we fight against lifestyle creep? What can we do to ensure that we still have a reasonable spending habit despite our earning capacity increasing?

  1. Create a budget and stick to it
    Having an effective budget can help mitigate the cost of lifestyle creep. Setting a fixed amount for expenses would help you know when you start spending more than you should on a monthly, daily or yearly basis.
  2. Set long term trackable goals
    The problem a lot of the time is that we don’t have a long-term goal in mind. There is nothing to look forwards to and plan towards. It’s important to have long-term goals so that we can align our bugdet and finances with those goals.
  3. Automate your savings and investments
    Savings and investments shouldn’t be the last thing on our minds whenever a paycheck hits our account. It should be the first thing and should be adequately prioritized. Automating your savings and investments would remove the chance of forgetting to do it. And it reduces the mental stress on your part.
  4. Be prepared for rainy days (emergency funds)
    An emergency fund usually consists of three to six months of your monthly expenses saved up for quick access. This is important because life happens and we should be prepared. Unfortunate events like the loss of a loved one, the loss of a job or an accident can happen at anytime and it is very important to be adequately prepared for such events.
  5. Track your expenses
    The only way to know that you are gradually increasing your expenses with the rise in your earnings is by tracking your expenses. Having a regular review of your expenses would help you know where all your money is going to and if you are spending more than you should.
  6. Start viewing paycheck raises and bonuses as extra savings
    This is a very important point to consider. Instead of seeing bonuses and pay raises as extra money to spend, look at it instead as a way to increase the amount of money you would save normally. Having this mindset would ensure you keep on living as you should without mindlessly spending any extra income that you receive.

Lifestyle creep can happen to anyone, and more likely than not, if it is not checked early enough, it would cause a very bad dent on our financial health status.
The fact that you are aware of this concept puts you way ahead of most of the population.

Don’t let life just keep moving you from side to side. Take back control and watch every aspect of your being flourish!


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