What Is Lifestyle Creep?

There are a lot of financial buzzwords that float around — and while a lot of them are simply trendy terms, certain concepts are worth paying attention to. Lifestyle creep might sound like a non-serious trend but it could be what’s stopping you from reaching your financial goals, even if your pay stub suggests that you’re financially well-off. It’s alarmingly easy to fall prey to lifestyle creep if you’re not careful — especially if you want to show off or celebrate a raise or promotion at work. We want you to make — and keep — as much of your hard-earned dollars as possible. That’s why we spoke to personal finance experts to help explain exactly what lifestyle creep is — and how you might have fallen prey to it if you’re making more money but still feel like you’re living paycheck to paycheck. RELATED: How to Own Your Masculinity Today What Is Lifestyle Creep and What Are the Dangers? “Lifestyle creep, sometimes called lifestyle inflation, is a phenomenon where your lifestyle outpaces your income, and you live outside your means even if you get a raise,” explains Mark Henry, Founder & CEO of Alloy Wealth Management. “If you continually upgrade your whole life every time you get a raise without prioritizing saving or investing, you’ll struggle to build wealth or even escape living paycheck to paycheck.” It’s important to keep in mind that even though you technically can afford that shinier car or premium vacation, if you continue to upgrade your lifestyle every time you find yourself with a raise or a bonus, you won’t actually have any more money than you did before you started making more money. Falling into this trap will result in you never being able to really get ahead in terms of financial growth. It’s not to say that you can’t treat yourself every now and then — you deserve to enjoy some of that hard-earned cash — but if you continue to upgrade your lifestyle exponentially, not only will your financial prosperity stagnate but you’ll also want to consider why you feel the need to purchase external validation. Instead of splashing out on a more comfortable lifestyle, you’ll want to consider maintaining the same lifestyle standards even as your paycheck grows. Of course this doesn’t mean to struggle and scrape by when you don’t have to — but it’s probably not the time to upgrade your flights to business class or rely on Uber Eats for most of your meals. Instead you’ll want to save and invest that additional income in order to ensure you have a safety net as you get older and your circumstances change. Your retirement-age self will thank you! How to Avoid Lifestyle Creep The best way to avoid lifestyle creep is by staying on top of your budget or spending plan, says Henry. No matter how much you make, you should aim for a zero-sum budget, where every dollar earned is assigned a job. “If you get a raise or receive any additional income, you might be able to spend more on wants, but be sure to bump up your savings goals and take care of other financial responsibilities first,” he suggests. According to Henry, not knowing where your money is going can lead to lifestyle creep, too. “Be sure to continually track your spending, so you know if you overspend in one area and need to cut back or adjust your spending plan. You might be spending more than you think, especially if you recently got a raise and feel like you have extra cash.” “Lifestyle creep can be a slippery slope,” says Brian Steiner, Executive Director at non-profit Life Happens. “The key is to understand your personal finances so that you can have a sound financial plan, which, in my opinion, should be written down since a budget can be much more visualized and remain top of mind when it’s written.” It’s also helpful to have someone to talk to about your finances, someone who can help mitigate and handle the outside pressures, says Steiner. Educate yourself on lifestyle creep, alongside societal pressures, and marketing strategies. Having a better understanding will allow you to recognize what is happening and take a step back. Why Would Someone Fall Into Lifestyle Creep Patterns? Lifestyle creep can happen without you even necessarily realizing it — which is why it’s so important to keep a budget in mind and be aware of your financial plan and future. Think of it like this: do you want to look rich, or do you want to be rich? “It can be extra tempting to give in to lifestyle creep in the age of social media, where we constantly compare ourselves to others who seem to always be on vacation or keep up with the latest trends,” says Henry. “Keeping up with the Joneses” or trying to buy status is one of the most common lifestyle creep traps. Remember everyone has different financial goals and lifestyles, and the person who seems like they have everything could be swimming in debt. “Stick to your spending plan, and don’t blow it just to go out with friends every other night,” Henry adds. “If you feel like you need to spend money to impress your friends, they probably aren’t very good friends in the first place.” What’s more — if you’re falling into lifestyle creep because you feel the need to flash your successes in the form of new status items or fancy vacations to post on social media, you might want to consider where you’re at in terms of what success means to you. Fostering a healthy social life and investing in your own inner personal growth is the best way to feel as successful as you are; once you’ve got this down the external validation won’t matter as much anymore. You Might Also Dig:  40 Things to Do When You Turn 40100 Tough Things Every Guy Should DoWhat Is a Sigma Male?