Money Tips

Lifestyle Creep: What Is It and How to Easily Avoid It!

< back to blog home

*This post may contain affiliate links.

If you’re not careful, it’ll steal all your hard-earned money…

I’m not talking about good ol’ lifestyle creep!

 

What is lifestyle creep?

It’s when your income increases so you increase your expenses as well.

So a promotion, making more money via your biz/side hustle, a new job, a raise, etc. 

And the crazy thing is that this is often done without us knowing what we’re actually doing!

You whip that calculator out to see how much more you’re bringing in and then all of a sudden your taste buds get boujie or your apartment is not up to par anymore.

Before you know it, you’re right back in the place you were before and you’re asking yourself “Where is all my extra money?!”

GONE.

 

Here are some tips to help you avoid lifestyle creep once and for all.

 

Increase your retirement contributions. 

Whether this is via a 401(k), 401(b), IRA, or whatever, consider upping your contributions. Especially if you’re not contributing up to whatever your employer matches!

This way, you won’t even see that extra money so you won’t be so tempted to spend it.

 

Start saving for your kid’s future. 

We all want better for our children and what better way to avoid lifestyle creep than to set up their future?

Whether your paycheck is increasing by $10 or $400, it’s still enough to get started. It literally doesn’t take much.

I started saving for my daughter's future college expenses with a 529 plan after my promotion using just $15 per paycheck.

Depending on their age, those small contributions will grow with time.

 

Some accounts to consider are:

  • 529 plans. These are investment accounts used to save for education expenses.
  • UGMA or UTMA. I use the EarlyBird app to manage my UGMA and I cannot recommend them enough! It’s the simplest way for parents, family, and friends to collectively invest in a child’s financial future. Check it out here.
  • Custodial Roth IRA. This is an Individual Retirement Account that's for minors with earned income.
  • Brokerage account. This is an account used to buy and sell securities such as stocks and bonds.

If you don’t have enough to purchase the particular investment you’re striving for, like a mutual fund, set up a sinking fund and start saving that way.

 

Increase your debt payments.

If you were feeling behind because you could only pay $10 more than the minimum then it’s your time to shine! Don’t let the temptations of this world take opportunities away from yourself.

Depending on which debt balance is taking up the most room in your budget or causing you the most headache, target one specific balance in order to maximize the extra money you’re applying.

If you don't have a list of all your debt balances, you can use Credit Sesame's debt analysis feature. This way you can monitor your debt and your credit at the same time!

Or, add all your accounts under one sign-on with Personal Capital.

Both of these apps are completely free!

Keep your living expenses relatively the same. 

THIS IS A HUGE ONE and it was such a key role in allowing me to pay off debt without being a high earner. 

I literally doubled my spendable income by keeping my living expenses somewhat the same.

 

I’m talking about:

  • Your place of residence
  • Grocery budget
  • Personal funds
  • All of that!

 

Now obviously if you live in an unsafe environment, or one that’s just plain raggedy, then yes, get something that is higher quality that fits within your budget. 

But you’ve got to beat your mind at its own game. Because it’s going to tell you to get everything you’ve been desiring because you can afford it now

But just because you can afford something, doesn’t mean it’s the best financial decision for you.

 

A good tip is to write out your goals and do a mock budget using your new income. This way you can visually see the effect that adding in new expenses will have on your finances.

Trust me, you’ll start thinking differently when you see all that money disappearing!

 

Additional posts to check out next!

4 Super Simple Ways to Teach Your Kids About Money!

I’m Debt Free! How to Get Out of Debt as a Single Mom

The 5 Biggest Money Mistakes to Avoid in Your 20s – That I’ve Done!

Finally Moving Out? Cheap Decorating Ideas for Your First Apartment

5 Telltale Signs That Your Budget is Failing! + How to Fix It!

10 Easy Ways You Can Make Extra Money From Home

13 Smart Ways to Get Ahead Using Your Tax Refund This Year!

How to Use a Credit Card to Build Credit – 4 Simple Tips to a Better Score!

 

Set up an automatic contribution to your savings. 

Automatic contributions are really good for those who tend to talk themselves out of saving because it’s going to do it for you!

The amount you send will of course depend on your money goals as well as how bad you need the extra money you’re bringing in. If you are fine with your income as it is, consider sending the extra money that’s added to your pay to your savings. 

Or, if you weren’t able to save a lot before, depending on your savings goal, add the amount you need to your contribution. 

 

Conclusion

Alright, that wraps up how to avoid lifestyle creep.

One major tip I will leave you with is to get behind yourself. Sit down and re-evaluate your values. Whatever it is that you want to do financially and the life you truly want to live, you have to be willing to get behind that vision. In order to do so, you have to get comfortable being uncomfortable.

Many people say they want it, but few show it via their actions.

Leave a Reply

Your email address will not be published.

search our blog for help!

Hey! Do you have any advice on...