How to Beat Lifestyle Creep

how to avoid lifestyle creep

When you get a raise or a tax refund or some birthday cash, the first thing that probably pops into your head is a list of ways to spend that extra money.

Maybe it’s upgrading your phone, or taking that vacation you’ve been dreaming about, or finally getting around to completing that bathroom remodel you’ve been wanting.

If you continue to spend more every time your income grows, you’ll never be able to build true financial security or make progress toward your big picture financial goals — no matter how much money you earn.

While there’s nothing wrong with the occasional splurge or lifestyle upgrade, it’s important that these extra expenditures don’t become a regular habit — eating up the entirety of your pay increase or financial windfall with added spending that leaves you with nothing leftover to dedicate to longer-term financial goals.

Sure, a little lifestyle inflation is ok. At some point, you’ll probably want to ditch the three roommates, ramen and used Ikea furniture. And your expenses will inevitably climb in certain situations, like when you start a family.

But if you continue to spend more every time your income grows, you’ll never be able to build true financial security or make progress toward your big picture financial goals — no matter how much money you earn.

This phenomenon, labeled lifestyle inflation, really becomes an issue when your increased spending starts to become more habitual and less intentional, and prevents you from building financial security or reaching your long-term financial goals.

These four strategies can help you keep your own lifestyles inflation in check.

Track Your Spending - and How You Feel About It

Just because you’re making more doesn’t mean you should stop paying attention to your money. In fact, tracking your spending is arguably more important as you experience increases in income, as reviewing your day-to-day purchases will let you know whether you’re really getting the most out of the extra money you’re making

You don’t want to get into a situation where you spend more and more and never feel any happier or better off as a result.

By tracking your spending and considering how you feel about where your extra dollars are going, you can make better spending assessments. Deciding what lifestyle upgrades are really worthwhile and what long-term saving and investing choices might serve you better.

You can even use an app like Joy that tracks your spending and asks you how you feel about each purchase, so you can make smarter more intentional money decisions every single day.

Save Your Raises

As your income grows, be sure to automate your savings and investments to grow along with it.

You can increase how much you’re contributing to your 401k and set up automatic transfers from your checking account into your savings accounts on a regular basis.

Setting up a system of automatic savings and investment contributions on a portion of your extra income can help you avoid the temptation to spend all your extra money mindlessly or in one fell swoop.

With a one-time adjustment to your savings rate every time you get a raise, you can make progress toward your long-term financial goals without making major sacrifices to your lifestyle.

With less money sitting around in your wallet or checking account, you’re less likely to give in to impulse purchases and fall into the trap of buying stuff you don’t need just because the money is there in your account.

That’s not to say you have to save every extra dollar you make, but setting up a system of automatic savings and investment contributions on a portion of your extra income can help you avoid the temptation to spend all your extra money mindlessly or in one fell swoop.

Keep Your Eyes on the Prize

Keeping lifestyle inflation in check isn’t about restricting your spending just for the heck of it. It’s about making choices about how you spend and save so you can really maximize your money and afford the things that matter most to you.

Do you want a nicer apartment now, a vacation this summer or to finally pay off your student loans? There’s no one right answer. As long as you’re taking the time to think through these choices and identify the goals that matter most to you, you’re far more likely to avoid mindless lifestyle inflation and get what you actually want out of the extra money you’re making.

Practice Gratitude

One of the best ways to avoid impulse buys and overspending at any income level is to practice gratitude.

Take time to recognize and say thank you for all the things you already have. When you feel full with gratitude, you’re less likely to rely on spending as a tool to fill any voids.

While earning more money can be a powerful tool for getting ahead and making real progress toward your big-picture financial goals, it’s only effective if you actually keep some of that extra money you’re earning.

So remember to keep these four strategies in mind so you don’t succumb to lifestyle inflation, making sure every extra dollar you earn really counts.