We all want to live a great life and the best way to set ourselves up in the long run for a sustainable lifestyle of our choosing is to focus on limiting lifestyle creep while in pursuit of financial freedom. This means eliminating monthly overspending and reducing any bad debt we’ve incurred, so we can build the extra streams of income from assets that will support our long-term goals.
That is how we can finally get out of the rat race, leave the financial stress behind and have the freedom we truly crave.
What is lifestyle creep and how does it happen?
Lifestyle creep is what happens when our expenses maintain pace or surpass the increases we receive in our income. It can happen easily when a spending plan isn’t in place because the additional income gets allocated to do things like upgraded phones and computers, a bigger living space, leaning more on convenience services like grocery and meal delivery, dining at nicer restaurants and so on.
Then, when you add in the unconscious spending decisions we make, like impulse buys online and at the check out counter and the impact of inflation, the amount of money we have at the end of the month to pay down our debt and invest in our future is gone and we remain financially stuck living paycheck to paycheck.
This is why we need to understand where we are allowing lifestyle creep in, so we can curb those spending habits that are taking us away from our long-term goals.
Discover what is driving your spending habits.
A big part of understanding your version of lifestyle creep is discovering what drives your spending habits, sometimes without you realizing it.
Our subconscious mind is powerful and there are many reasons that we overspend, including:
- A feeling of “I deserve this”
- Retail therapy – spending as a reward or to relieve stress
- Keeping up with social expectations
- Extravagant gifts for special occasions like birthdays, Christmas, anniversaries, etc.
We are also really good at justifying every indulgence with logical arguments for our purchases but every time we do, the lifestyle creep impacts our future and the life we really want to live. So, the key to making changes to your spending habits is understanding what drives them, then you can build your personal strategy to curb the behaviors that are keeping you swimming in bad debt.
How lifestyle creep affects your long-term goals.
It’s important to bring overspending and lifestyle creep into perspective. Every purchase that is driven by wants instead of needs affects your ability to build the wealthy future you desire.
Overspending:
- Delays debt payoff
- Shrinks your savings potential
- Prevents wealth-building investments for your future
- Makes you dependent on a higher income
To have the future you want, you must learn how to stop lifestyle creep and take the steps to build the financial discipline that supports your vision.
How to stop lifestyle creep—for good!
Financial freedom happens when your income exceeds your expenses. To attain it, you can manage lifestyle creep by clarifying your bigger vision and aligning your priorities with it, especially your financial goals.
Once you have defined what is important to you and what you are working toward, it is important to always keep these priorities at the forefront of your thoughts and start evaluating your spending decisions.
Before you make a purchase that is not in your spending plan, ask yourself one or more of these questions:
- Does this purchase align with my bigger vision or take me away from it?
- Do I truly value this item?
- How many hours of work does this represent?
- How will this purchase affect my ability to reduce bad debt and invest in my future?
- How many times will I use this?
- What will this purchase prevent me from doing?
Another great personal finance tip that limits lifestyle creep is delaying the purchase for a few days. This helps to curb impulse spending because it gives you the space to decide if it is something you really need to buy at this time.
The solution for lifestyle creep is simple but it does take financial discipline to stick to your budget and strengthen the wealth building habits that lead to the future you really want and deserve to have.
I wrote How Money Works for Women: Take Control or Lose It specifically to support women in their wealth building journey. The book shares practical solutions for the unique financial challenges and opportunities that women encounter throughout their lives from paying for college, to starting a business, to raising children, to taking care of elderly parents, to planning for retirement and long-term care needs. I invite you to share this book with the women in your life.
No matter what stage of life you are in, How Money Works for Women: Take Control or Lose It will help you develop the smart money habits that lead to a wealthy future.