Lifestyle Creep, also known as Lifestyle Inflation, is a slippery slope that can potentially lead to financial ruin. Let’s say you’ve worked hard and received a promotion with a considerable pay increase OR you have just paid off a large debt; what do you do with the newly available funds?
You might think about treating yourself to a nice dinner out. You might even go out and get yourself a new wardrobe or upgrade your TV. You’ve earned it, right? The danger lies in the frequency of how often you treat yourself. Before you know it, dining out becomes the norm and luxuries become your necessities.
If you’re not careful, you can find yourself in a mountain of debt or even on the verge of bankruptcy.
How Lifestyle Creep Affects Us
With dual incomes, no mortgage, and no kids, Brian and I enjoy using our time and money how we see fit. We have definitely noticed a touch of Lifestyle Creep, as we have spent more money on meals out rather than in. Dining out has been the biggest change in our budget since we have become debt-free. When we were focusing on paying down debt, we kept our eating out to a minimum. When we did go out, we solely relied on Restaurant.com deals. Once we paid off our mortgage, we slowly started to dine out more.
At first, it was a real treat to venture out on weekends and spend time with each other or our friends. However, within the past few months, we have realized that we dine out much more than we should (2 or 3 times a week!). Instead of being a treat, dining out has become a habit of convenience. Luckily, we have been able pull in the reigns. Brian and I have had a pretty frugal month so far, with only having dined out twice.
Curb the Cost
It’s a-ok to reward yourself every once in a while. The key is to understand how to balance saving for the future while living for today. Fortunately, Brian and I share similar financial viewpoints and goals, which makes it easier to maintain that balance and keep each other in check! We keep an eye out for Lifestyle Creep and hold ourselves accountable to ensure we stay on track.
8 easy ways we curb the cost of Lifestyle Creep:
1. Appreciate The Little Things
Appreciating the little things helps to redirect your sense of fulfillment. This leads to more positivity and intentional focus. It can be as simple as appreciating the fact that you are waking up to start a new day or able to work to provide for yourself. For me, even when I shower, I take a moment to appreciate having running water. When I think about these little things, I realize I don’t need all that much to be happy.
2. Create Money Challenges
Whether we save 50% of our paychecks per month or max out our IRA contributions in the first three months of the year, we try to create money challenges to keep us budget-conscious and entertained!
3. Pretend There Is Less Money
Sometimes (more often than not), I still pretend I am a broke 20-year old trying to make it in the world. It works wonders. I stash the extra cash in my savings!
4. Track Every Dollar
If you find yourself spending a tad more than usual, take a week or even month to track every single dollar. You will find yourself questioning and discovering what could use some elimination.
5. Find A Support Group
We are incredibly grateful and blessed to have friends and family who understand that we prefer a more frugal, low-key life sometimes. This way, we still visit with everyone without breaking the bank!
6. Apply The 30-Day Rule
A good rule of thumb to help prevent unnecessary purchases is to wait 30 days. Instead of letting instant gratification empty your wallet, a 30-day waiting period gives you time to research and reaffirm your purchase decision. Honestly, I can be a little excessive – I typically wait much longer than 30 days and can sometimes wait up to a year!
7. Name Every Dollar
Know how much money you’re working with and where it goes. Whether you are covering rent, tuition, debt-repayment, or funding a savings or “fun” account, the idea is that your money has a place to go when it comes in. Money sitting with no purpose can be too much of a temptation for those who spend whatever they can get their hands on.
8. Remember Your Roots
Lifestyle Creep occurs when increased earnings lead to an increase in discretionary spending. If you find yourself getting too comfortable with too many luxuries, it’s helpful to remind yourself where you started in life. Things happen in life that could strip you of the comforts of your status quo. Can you remember who you used to be and how you used to live? Could you return to it if you needed to? I used to spend $20/week on groceries for myself. I could definitely go back to that, though Brian claims he would starve and wither away!
Using these methods, we have been pretty successful at keeping Lifestyle Creep at bay. Life is all about balance. Appreciate the little luxuries of life, treat yourself every once and while, and have yourself an adventure. Just make sure you keep tomorrow in mind.
Have you slipped into Lifestyle Creep? Do you have any suggestions on how to prevent it?