5 Ways To Avoid Losing Money to Lifestyle Creep After Getting a Raise
Written by
Laura Bogart
Edited by
Kristen Mae
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Congratulations, you’ve gotten a raise! After many long hours of hard work, you can finally take a moment to lift your nose from the grindstone and raise your fist in triumph. You might think it’s time to treat yourself. Why not get yourself that slick new suit you’ve been eyeing? Spend a little more on organic groceries? Upgrade your car? After all, you’ve earned it.
Sure, you’ve earned it, but if you want to secure your financial future, focusing on retirement savings and building an emergency fund is crucial. This means avoiding the siren call of lifestyle creep. Like Odysseus lashing himself to the mast of his ship, you’ll need to resist the sweet song of “buy, buy, buy.”
Fortunately, avoiding lifestyle creep can be easier than you think if you follow these five simple rules.
1. Immediately Set Savings Goals
If you want to sidestep that old adage that more money equals more problems, start by emphasizing smart savings. A larger paycheck should prompt you to revisit your savings plan — or create one if you don’t already have one — to match your new income level.
Start with a specific goal, like saving for a down payment on a house or a car, building a six-month emergency fund, or financing that long-awaited dream vacation. Whatever the goal, you’ll want to attach a dollar amount to it. With a clear target in mind, instead of a nebulous push to “save more,” you’ll be more motivated to stick to your plan.
2. Stick to Your Current Budget
Don’t let that extra comma on your paycheck tempt you to splurge on pricier groceries or going out for lunch every day. Instead, stick to the budget you’ve developed — after all, it’s served you well so far. If you maintain your current spending habits as if you’d never gotten a raise at all, you can funnel your extra income into savings and investments, ensuring your raise works for you instead of against you.
3. Upgrade Strategically
Maybe you’ve been dreaming about a new washer and dryer or thinking about impressing your friends, neighbors, and colleagues with a sleek new car. But do you actually need these things? Before making any major purchases or taking out a loan, ask yourself if you truly need an upgrade.
If an appliance or item you use regularly is at the end of its life or needs a repair that would cost more than replacing it outright, it may be time to upgrade. But don’t just buy the most expensive or popular option. Do your research, and find the version with the best reviews, proven value, and reasonable prices.
4. Set Aside Some Money for Fun
All work and no play isn’t sustainable. The daily grind can take its toll if you never allow yourself to indulge in a little fun. So that it doesn’t turn into lifestyle creep, designate a specific amount of “fun money” into your budget for discretionary spending.
Love dining out? Cut back on the frequency and focus on quality. Instead of going to dinner every week, save your money for a monthly or bi-weekly outing to a more elite eatery. Big sports fan? Set aside some money for tickets to your favorite team’s home games — but skip buying unnecessary merchandise. Movie buff? Make a list of must-see releases you’ve got to see on the big screen while waiting for others to hit streaming services.
The goal is to strike a balance between enjoying your hard-earned money while still prioritizing financial discipline.
5. Automate What You Can
If money is idling in your account, it’s much more tempting to spend it. Reduce this temptation by automating transfers to savings, retirement accounts, and debt repayments.
You can put your extra earnings out of sight and out of mind by setting up automatic withdrawals that direct funds into accounts where they’ll work harder for you. Review your statements monthly to ensure your money is going exactly where it’s supposed to — you might be pleasantly surprised by how much you’ve saved without even thinking about it.
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