What Does Lifestyle Creep Look Like?!?!
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Lifestyle creep (or lifestyle inflation) is one of the biggest (and probably most overlooked) obstacle to getting ahead financially. It keeps many people stuck and in debt, and it’s why some people live above their means. If you’re not familiar with this term, it involves increasing your standard of living every time your income increases.
To be fair, earning more doesn’t mean that you can’t improve your life and satisfy wants. However, lifestyle creep often involves upgrading your life and stuff just because you can…
Some of the obvious signs of this include constantly upgrading your house or car, or getting into credit card debt. But it’s not always obvious – it can be subtle too. Here’s how it can creep into your life.
1. You stop looking for deals
If you live paycheck to paycheck or don’t earn much, hunting for bargains and waiting for sales is likely a priority. You have to stretch your pennies to meet your needs, so you might think twice about paying full price.
As your income increases, though, you might start to do less of this. Before, you clipped coupons or mostly bought generic brands. However, these frugal habits slowly disappear as your financial life improves.
The same can apply with clothes. Before, maybe you never paid full price. You knew most items would go on sale in a few weeks. But now, you might buy an item regardless of whether it’s on sale.
Now, I’m not saying that your spending habits have to stay exactly the same once you’re making more money. Realistically, some things might change. But as you compare your new habits with your old, consider whether things have changed a little or a lot.
It’s okay to “not” be so deal-conscious about certain items. However, don’t completely throw bargain shopping out the window. If so, you’ll spend more on just about everything.
2. You’re going out more often…and to better places
Personally, I love new experiences. And one benefit of earning more is that you’re able to enjoy new things – whether it’s going to different restaurants, the theater, or traveling. I always say, “experiences over things.”
Just know, lifestyle inflation can also creep into your life this way. Perhaps you used to only eat out two times a month. Now that you’re earning more, maybe this has increased to ten times a month. Not only are you eating out more, you’re also going to more expensive restaurants (spending an extra $10 or $15 per visit).
If you’re not getting into debt and you’re able to pay your bills, you might think it’s okay. But consider this: How much are you saving? Do you have a fully-funded emergency fund? Do you need to pay off credit card debt? Are you investing enough for retirement?
New experiences are healthy, but not at the expense of your financial health. Be balanced.
3. Spending more on self-care
When you’re at a lower income level, you might be unable to schedule regular salon appointments or nail appointments. So once you have extra income, self-care might become a priority (regular hair and nail appointment, facials, massages, brows, etc).
Of course, it’s not the act of spending on self-care that’s dangerous. But rather how much more you’re spending and the frequency of appointments.
4. Spending more than peers at a similar income level
Granted, we don’t have the inside scoop on another person’s bank account or bills. Many factors play into what a person can afford to do with their money.
Even so, you might have a general idea of a friend’s income level. If you earn roughly the same and have similar financial circumstances, yet you’re spending way more compared to them, it doesn’t hurt to take a closer look at your situation and look for signs of lifestyle creep.
Your friends might have less because they’re spending at or below their means, whereas your spending outpaces your income.
5. You’re paying more for conveniences
There’s nothing wrong with occasionally paying for things that make your life easier, and it’s okay to enjoy regular conveniences. Just know that these aren’t free.
Instead of driving to the grocery store for a personal care item, you now buy from a corner pharmacy because it’s closer – even though the item is more expensive here. And instead of picking up your takeout food, you’re now okay with paying an extra $6 in delivery fees.
Understandably, time can be more valuable than money. But you have to strike a balance. Throwing money at every inconvenience (just because you can) can become an expensive cycle.
6. You stop budgeting
I feel this is one of the biggest signs of lifestyle creep. I’ve even had people admit to paying less attention to their budget as they earned more money. Once they no longer had an income problem, budgeting didn’t seem necessary.
However, many of these people unknowingly traded an income problem for a “spending problem.” Once they stopped tracking their purchases, they began overspending in just about every category.
I’ve said this before – budgets aren’t only for specific people. Everyone has the potential to overspend. And honestly, the potential is greater the more you earn. So it doesn’t matter if your income increases by $5,000, $10,000, or $20,000, always know where your money goes and spend a reasonable amount on wants.