Struggling With 'Lifestyle Creep'? These Tips Can Help

Nov 8 / Ashley Maready

You just got a raise at work or a new higher-paying job? Congratulations! It feels wonderful to have more money coming into your household, and if you're Childfree, you can spend that money in any way you wish. But making more money can be a double-edged sword. Why is this? Two words: lifestyle creep. 

Lifestyle creep is when you have extra income…and your discretionary spending goes up as a result. It can be insidious. Maybe it starts when you realize that you can now afford to order takeout twice a week, rather than twice a month. And it continues when you decide that you're tired of your old wardrobe and want to replace it. Sometimes it even escalates to selling your modest paid-off car and buying something flashy to park in the garage. Any way you slice it, lifestyle creep can have a negative impact on your finances. And you deserve better than to live paycheck to paycheck and take on expensive debt because you've matched your spending to your income. Read on for some helpful tips and considerations to keep you from falling victim to lifestyle creep. 

1. Adjust your budget

Any time there's a change to your money situation, for good or for ill, it's a great idea to review your budget and make some adjustments. If you don't yet have a budget, I'm not here to shame you. I will say, however, that having a budget is one of the cornerstones of smart money management. The sooner you start budgeting, the better off you'll be, and it's so much better for both your peace of mind and your bank account to have a firm grasp on where your money is going every month. 

2. Automate your savings

One of the nicest things about making more money is that you'll have more money to save. If you haven't already set up an automatic savings transfer, it's worth looking into. Let's say you're aiming to save 20% of your income every month. Go back and have a look at that budget you just updated. Figure out what 20% of your new bring-home income is, and set up an automatic transfer from your checking account to your savings account. This can be monthly, or even better, it can be correlated to when you get paid, so that extra money in your checking is gone before you have a chance to notice it. You won't miss it, you won't spend it, and it can start earning interest in your savings account. 

3. Think about purchases before making them

Money can do so many things. And if you suddenly have more of it, it can be a lot easier to spend thoughtlessly. Resist the urge to stop considering your purchases before clicking "buy now" or tapping to pay with your credit card. I love online shopping, but I've tightened up my spending a lot this year. One of my favorite tricks to keep from overspending is to add an item to my online shopping cart and then just leave it there. Sleep on it, have another look tomorrow. You might change your mind, and then you get to spend that money on something you actually want, or add it to your savings. I am notorious for employing this technique with Amazon. My "saved for later" in the shopping cart goes on for literal pages (and years!), and I can flip through it and see a timeline of things that briefly caught my eye but ultimately, I decided not to buy. 

4. Focus on your money goals

One of my biggest helps in avoiding lifestyle creep personally is keeping my money goals front of mind. I started off 2022 absolutely obsessed with the idea of buying a house so I could stop renting. I have moved 10 times in the last 10 years alone, and as an adult, the longest I've gone without moving was the last time I owned a home; I lived there for two years and two months before leaving (and I later went through a short sale on it, which resulted in a lot of credit score damage). But I needed to both increase my income and pay off debt before I could start saving for a house down payment and all the related expenses I'll incur as a new homeowner. 

Now I'm there, and I'm saving for a house, and I hope to be financially ready in 2024. Do you have a big money goal like I do? Maybe you want to go back to school, or retire early, or have your dream wedding. Keep that goal in your mind. Write about it. Talk about it. Save that money. Don't let lifestyle creep keep you from achieving it.  

5. Enjoy your money

Remember your budget? Ideally, you've got a line built right into it for your discretionary spending. If you've gotten a raise or a higher-paying job, go ahead and add a little more money to that line. If you used to give yourself an allowance of $150 a month in "fun money," maybe now you can afford $250. Enjoy the fruits of your labor, and strive to actively make good choices with your money by focusing on ways that money can make you happy. 

Lifestyle creep can turn a good thing (more money coming into your household) into a not-good thing (a return to living paycheck to paycheck, going into debt, falling short of savings goals). Don't let it happen you – rework that budget, automate your savings, and truly think about your wants, needs, and financial goals before you spend.