Lifestyle creep refers to a condition where one’s income rises or their bills decrease, and this creates a temptation for a lifestyle inflation. When bringing in more discretionary income than normal, one’s lifestyle or standard of living could possibly go up along with their excess funds.
As this happens, and more money is spent on one’s lifestyle, goods and services that were former luxuries are now considered to be necessities. This means that things that are now considered to be “splurges” are even more out of their budget’s range.
Take a look at your unnecessary gadget upgrades, data plans, and cable subscriptions.
Are you eating out more, drinking fancy coffee, and buying more clothes?
Are you starting to find that things you once “wanted” are now considered to be things that you need?
If you are blowing money on excess clothes or dinners out with your friends, it may be a good idea to reconsider your budget.
When you were living on a tight budget, you probably had some serious financial goals. Do those goals still exist, or have you forgotten about them at the expense of spending money on frivolous things?
Revisit your goals and see if you are still on your way to achieving them. If you are getting close to them, set some new goals to reach even higher.
There are four things that everybody needs to survive: shelter, food and water, basic health care and hygiene products, and appropriate clothing. Anything beyond these things is a “want.”
This doesn’t mean that you should only buy what you absolutely need all of the time. It is fine to buy things that you want as well, but they should be considered a bit more to determine if you are wasting your money on an impulse purchase or buying something that will add some sort of value to your life.
Think about the things that you absolutely need, and the things that you just want, but that will be extra stuff around your house. This also applies to experiences.
Despite our best efforts, we all struggle to stay frugal sometimes. Maybe you notice a big sale going on at your favorite store, or you find a bargain website that you can’t resist. While you may be saving 50% on an item, is that an item you would have had to purchase anyway?
Big sales and bargains often lead us to believe that we need things that we don’t, or that we are going to miss out on a once-in-a-lifetime deal if we pass it by. Instead of shopping for prices, shop for products. If you see something on sale but you know that you don’t actually love it, you will just be wasting your money.
The truth is, you deserve to enjoy your success and the fruits of your labor. Life is meant to be lived and enjoyed, not just survived with your basic needs all of the time. But be sure to guard against lifestyle creep.
It can be tempting to upgrade your standard of living when you have more money coming in, but keeping a simple lifestyle and staying within your budget provides you with peace of mind, and will prevent you from letting your spending get out of control.