A lifestyle creep, or what you might also call lifestyle inflation, is a situation in which you constantly “level up” your lifestyle alongside your wage or salary increases. So how does lifestyle creep work?
Typically, lifestyle creeps happen when people start earning more money, either by paying off debt or receiving a higher income through a raise or a new job. The good news is that lifestyle creep cycles are avoidable if you identify your necessary expenses. We have put together a list of tips to help you keep the creeps away.
Create a monthly budget and stick to it
When your income increases, you may feel that you no longer need to create a personal finance budget because you think everything is within your reach. However, it is proven that without proper budgeting, you will even spend more money carelessly and even wastefully.
By creating a monthly financial budget and sticking to it, you will be able to refrain from making impulsive purchases as much as possible and avoid making financial decisions that purely focus on wants rather than needs.
Set long-term goals and track your progress
Set clear long-term goals as it tends to be more complex than short-term ones since they require constant planning and effort. Try to make your goals specific and detailed, with clear visualisation. This strategy will encourage you to work harder to achieve those goals.
After setting long-term goals, remember to monitor your progress because this will help you know how close you are to your goals. Knowing what you have accomplished will enable you to reflect on your efforts and develop a more profound understanding of the value you are creating. Naturally, this will make you more mindful of your efforts to achieve your goals.
Automate your savings and investments
Automation plays a more significant role than you may imagine in personal finance management. As humans tend to seek out pleasure, you will become biased toward your current selves. Thus, when given the choice between spending money on a sale or investing, you are more likely to choose the latter. These could become a barrier to saving for necessary future purchases such as a house.
When you enrol in automatic savings and begin contributing a certain percentage of your salary to savings and investments, you will not have the opportunity to use the money for savings or unnecessary pleasure because the money has already been secluded from your salary. You can even think that the portion of money you deserve is the salary after the deduction of savings and investments.
Surround Yourself with Like-Minded People
Most of the time, your decisions are made based on other people’s opinions and influence because you pay too much attention to their thoughts. Especially with FOMO, which does not help at all, you will always feel the urge to spend money even though, on reflection, the expenses are unnecessary.
You should surround yourself with people who support your decisions and will not drag you into an excessive lifestyle if you want to avoid negative influences that hurt your finances. They will unquestionably be your best ally in accomplishing your financial goals.
Even as your income increases, you still have the desire to fulfil the wants that a lower income would not allow. Unfortunately, this throws us into a detrimental lifestyle creep. The primary keys to banishing these thoughts are self-discipline in personal finance and good financial planning.