Do you feel broke even though you just got a raise or a bonus? Are you spending more time shopping than you did a few months ago? Lifestyle creep may be stealthily finding its way into your life.
The truth about lifestyle creep didn’t hit me until my other half and I bought our first home and were shopping for couches to put in our new, larger space. The price tag on new couches had me in tears. Prior to this moment, we were living in 700 square feet with two cats. We lived in that little apartment for four years. That apartment was filled with mostly hand-me-downs from my sisters or low cost furniture pieces.
For some reason, the cost difference of being in 700sq.ft. to 2000sq. ft. never sunk in to me until buying items for our bigger space. I wasn’t able to save a single dime during the first year in our new home. Things could have been very different story had I been more aware of lifestyle creep!
Lifestyle creep, also called lifestyle inflation, is when your spending habits increase when your income increases.
Lifestyle creep is sneaky. Get a bonus and splurge on treats for yourself? Get a little raise and to celebrate you go out to dinner with friends more? Not all lifestyle creep comes in the form of house buying; it’s those little things you add in to your budget over the years that you didn’t use to buy before.
Sometimes it is hard to notice lifestyle creep. I started feeling it in myself when no matter how many raises I got, I still felt broke. I didn’t understand how I could be making more money but still not have enough. After I got out of debt, I kept saving that money knowing we’d be buying a home at some point, but what happened to the rest? I started frivolously spending. I loved a random trip to Target where I spent money on who-knows-what. Month after month, I felt like I was living paycheck to paycheck.
Lifestyle creep also comes in the form of increased debt. Feeling like you can swipe your credit card more often, only to find a larger bill than you expected at the end of the month. Only paying the minimum on your loan payments, even though you have more money that could go toward that debt. When you give in to lifestyle creep, that sneaky debt mountain seems to grow bigger and bigger.
I’m so guilty of this. After throwing all my money at my debt, I felt like I deserved to spend money on whatever I wanted. I vividly remember standing inside an Aveda store telling my other half, “I’ve never been bougie about anything, maybe I’ll start buying expensive hair products!”
I spent three months buying that expensive hair product before I decided it was too much. No shade on Aveda, their products are amazing! I just didn’t value spending a ton of money on hair care prior to getting debt free, so I let lifestyle creep convince me I deserved to spend more than I felt I should. Take a hard look at your spending and ask yourself, “Did I care about buying this one, two or three years ago?”
The best method to fight lifestyle creep is going to depend on what works best for your individual situation. Below are tips and methods to get lifestyle creep under control!
- Know Your Why and Set Your Goals
- Rip the Bandaid Off
- Make a Budget
- Take Stock of What You Have
None of this matters unless you have a reason for saving money. Mine is Financial Independence. I want to make an impact without worrying about an income. My goal is to retire by the time I am 40.
Do you want to get out of debt? Want to save money for your first home or investment property? Feel like you should be spending more time with your kids and pets? No matter what your why is, write it down, share it, hold yourself accountable to your purpose and your goals!
I’m not good at small incremental changes over time. That may work for some folks but I’m more likely to make a change if I dive in 100%. I ripped the bandaid off of my lifestyle creep by maxing my 401k contributions.
I had gotten a promotion a few months prior to doing this and the money from that promotion kept going towards lifestyle creep expenses (I really didn’t need yet another plant for my yard!). The only way for me to stop in my tracks was to hide that money away from myself. The added bonus of maxing my 401k was that I ended up saving nearly $400 a month that would have been thrown away in taxes. This method dropped my take home pay back to what it was before my promotion. This forced me to budget on what I was making while still saving a ton of money.
There are other ways to rip the bandaid off though. You could set up automatic transfers to a savings or investment account. You could put that extra money toward debt payment to get yourself debt free faster. No matter which method you choose, stay with it. Every refund, bonus or raise you get should be put toward your method!
Budgeting is a core skill in controlling lifestyle creep. I wrote a comprehensive guide to budgeting that goes over everything you need to know and think about. But, when lifestyle creep has taken over, likely the cause is that your budget method isn’t working for you anymore.
It might be time to change things up and try a different budget method. The three main methods are paper and pencil budget planners, apps, and cash envelopes.
Take a look over my recommendations for each method and try one that resonates with you!
- Mint – Mint is probably the most popular budgeting app out there. It is easy to use. You can connect all of your credit cards, bank accounts, set spending limits for all of your budget categories and track all of your expenses. Mint will also alert you when you are about to go over one of your spending limits. So if you need the extra nudge, Mint is great for you. The only downside of mint (and any app for that matter) is if you prefer to spend cash versus using your debt and credit card since apps can’t automatically track cash spent. I started out my budgeting journey using Mint. It was super helpful as I learned about my spending habits. Overall, Mint is a great place to start!
- PocketGuard – PocketGuard has a really great layout is super easy to use like Mint. The interface is sleek, which always makes budgeting more fun. PocketGuard is also great for projecting your expected expenses and income and helping you manage your money more effectively. This app is basically like your own personal budgeting assistant in your pocket!
- Personal Capital – Personal Capital is my new best friend. I started using it a few months back to track my net worth but then I found myself really likely the budget tracking option in the app as well. It is sleek, simple and not covered in product ads which I really appreciate. If you have been budgeting for awhile and want to try something new, then I highly recommend Personal Capital. But, if you are brand new to budgeting then Mint or PocketGuard might be the right partner for you!
This is the method I use every day. It forces me to not just swipe a card or hand over cash without taking the time to reckon with my decision by writing it down. Paper and pencil budget planners create very reflective process and works the best for me.
- Clever Fox Budget Planner – This is my favorite planner. It really makes everything so easy to follow.
- Limitless Mindset Budget Planner – Similar to Clever Fox but it is spiral bound (I’m a sucker for spiral bound notebooks) and has cash envelopes to help you manage your budgeted money.
- GoGirl Budget Planner – Similar layout to Clever Fox but with a more feminine feel. Super great budget layout!
- Saveyon All-In-One Pretty Penny Budget Organizer – Fantastic all-in-one system! It’s a wallet, budget planner, and cash envelope system that also includes a receipt/coupon pocket! I don’t know about you but I love multi-use items.
- Budget Keeper Cash Envelope System – This is a super easy to use, simple, and affordable cash envelope system. This one is a great system to start with if you want to keep it simple.
- Clever Fox Cash Envelopes – You can probably already tell I love Clever Fox’s products (their notebook is my fav!). Their design is sleek, simple, and easy and in such beautiful colors. Their envelopes are super durable and they include a great quick start guide to help you dive in to cash envelope budgeting!
The itch to upgrade is real. I keep fighting off the itch to buy a new (to me) car. Every time I enter Target I see something pretty that I think will be adorable in my house, even though I probably have seven of that type of item at home. That itch you feel is lifestyle creep at its finest.
There are a few books that helped coach me through this transition to spending less. Reading Cait Flanders’ book The Year of Less: How I Stopped Shopping, Gave Away My Belongings, and Discovered Life is Worth More Than Anything You Can Buy in a Store helped me restructure my thinking. Instead of buying things, I start going through what I have and truly reflecting on if I actually needed whatever I was buying.
With a little bit of magic from Marie Kondo’s The Life-Changing Magic of Tidying Up: The Japanese Art of Decluttering and Organizing thrown in to my approach. I started organizing and feeling more joy in the things I already owned. I was able to find new purposes for items I had tucked away in drawers and found things I forgot I had.
My other method to fight that lifestyle creep itch is to clean! It is amazing how much better you feel about what you have when it is not a mess. Since curbing my spending, I’ve spent more time cleaning (instead of shopping) and it’s wild how thrilled I am by what I have!
Getting in control of your spending gives you more control of your life. Just because your friends spend money like there’s no tomorrow doesn’t mean you should! I’m saving money so I can reach financial independence and not spend most of my waking hours at work.
Think about it. That extra $300 you are spending per month could be worth over $200,000 in 20 years if you invest that money instead! By saving money, you are buying back your time from your employer and giving yourself your freedom back.
So tell me, do you believe you are worth more than whatever you are shopping for? If so, it’s time to knock out lifestyle creep for good!
Disclosure: Advice given in this post are for education and entertainment purposes only. Please consult a financial professional for further advice. Bear in mind that some of the links in this post are affiliate links and if you go through them to make a purchase I will earn a commission. Keep in mind that I link these companies and their products because of their quality and not because of the commission I receive from your purchases. The decision is yours, and whether or not you decide to buy something is completely up to you.