Unpacking Lifestyle Creep: How to Spot It and Stop It
Written by
Katie Wudel
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
Have you ever noticed that your spending tends to increase as your salary rises? This phenomenon, known as lifestyle creep, can subtly sneak into your life, transforming newfound financial gains into increased expenditures. The danger? You may not be better off financially despite earning more. Here’s how to spot lifestyle creep and ways to stop it before it derails your financial goals.
What is Lifestyle Creep?
In simplest terms, lifestyle creep occurs when our standard of living improves as our discretionary income rises. This could mean upgrading to a pricier apartment because we got a raise, or splurging on luxury items because we think we can afford them now. While it’s natural to want better things as you earn more, the danger lies in escalating your spending habits to the point where you save little to none of your increased earnings.
Signs of Lifestyle Creep
Lifestyle creep happens gradually. It might start with one new outfit. Before you know it, you have a closet full of designer clothes. Here are some of the signs you’re headed for disaster:
Upgraded luxuries become necessities. Remember when dining out was a once-a-month treat? If those restaurant visits become a weekly or even daily occurrence without a deliberate decision, you might be experiencing lifestyle creep.
Saving less, spending more. If your income rises but the percentage you save dwindles or remains stagnant, that’s a red flag.
Debt accumulation. You earn more, but you’re also borrowing more. This means you’re living beyond even your increased means.
Justifying excess spending. Do you find yourself saying, “I deserve this” more often? While self-care is crucial, using increased income as a justification for every purchase can indicate lifestyle creep.
How to Keep Lifestyle Creep in Check
If you’re noticing a pattern, take charge of your money now. Here’s how to keep lifestyle creep in check:
Stick to a budget. Regardless of income fluctuations, always have a budget. Track your expenses, review them periodically, and adjust as necessary.
Maintain your savings rate. If you get a raise, consider increasing the amount or percentage you save. Instead of a 10% savings rate, think about pushing it to 15% or 20%.
Live one step behind. Just because you can afford something doesn’t mean you should buy it. If you get a significant pay hike, don’t immediately move to a pricier home. Enjoy the comfort of having extra money instead.
Distinguish between wants and needs. Before any major purchase, ask yourself if it’s a luxury or a necessity. This will help curb impulsive spending.
Set financial goals. Have clear short-term and long-term financial goals. Whether it’s buying a home, traveling, or retiring early, keeping these objectives in mind can deter unnecessary spending.
Regularly review expenses. Sit down monthly or quarterly to review where your money goes. This will help you spot and halt any creeping habits.
Final Thoughts
While enjoying the fruits of your labor is one of life’s pleasures, it’s crucial to do so mindfully. Recognizing the signs of lifestyle creep and taking deliberate steps to counteract it ensures that as you earn more, you also retain the capacity to save, invest, and secure your financial future. With awareness and intentionality, you can enjoy the best of both worlds: a comfortable life today and a financially stable tomorrow.
Editor's note: This article was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates' editorial team.
More From GOBankingRates
