Q: I’ve had a few pay rises in recent years, and I’ve noticed that my spending has also been increasing. I feel like the things that were once nice to have treats, have become essentials that I struggle to do without, and I’m getting very caught up in trying to maintain a certain type of lifestyle. With the cost-of-living increases, I know that I really need to get this under control, but would appreciate some tips in terms of where I could start?
A: What you’re describing sounds an awful lot like lifestyle creep, and it something that many of us can find ourselves going up against once we have access to more money. It’s referred to as creep, because it can be a bit of a surprise. One day you barely notice the cost of your lifestyle. Then the next, the little things that were once treats or luxuries have become everyday necessities, you’re no longer looking for deals when you’re shopping but are instead finding yourself making impulse purchases, and rather than focusing on yourself, you are increasingly spending to give the appearance of having a certain type of lifestyle.
It is of course perfectly normal for your standard of living to increase as your incomes does (I know I certainly don’t want to still be living like a student now I’m in my 40s and have a steady income!). However, if we don’t keep tabs on lifestyle creep, the money that we should be using to build wealth and achieve our financial goals will likely be diverted into impulse spending and trying to keep up with the Joneses.
The good news is that there are some simple steps you can take to try and get lifestyle creep under control:
- Rework your budget and create a fun fund
Yep, it’s back to the drawing board with the budget for the first step. Go over what you are setting out for the various aspects of your life each month, and make sure that you are allocating some cash for leisure, a fun fund if you like. This will give you the assurance that you are going to still get some of the luxuries and things you enjoy, yet not at the cost of other essentials in your life.
- Divert cash into savings and investing
As well as setting up a fun fund, if your pay has gone up, it might be worth thinking about putting more aside for savings/investing rather than leaving it floating. Putting your cash towards savings or investing, means you are making it work harder for you, and also takes temptation out of your hands. If money is tied up elsewhere, it’s less likely to be used for impulse spending.
- Stop the comparisons
In the era of social media, the temptation to keep up with the Joneses, our friends, or even online influencers is never far away. Yet deep down inside we know that what we are seeing flash across our screens is far from reality. So, as I always say, don’t be afraid to step away from the screens, and cut down on your social media time if you feel like this could be a trigger for your lifestyle creep.
- Check in on your emotional wellbeing
Lifestyle creep is linked to emotional spending, so it might be an idea to stop and think about how you are measuring your sense of self and happiness. Even though our consumerism obsessed society might have you thinking otherwise, our contentment rarely lies in spending, and it’s really not likely that we’ll find true happiness in ‘things’. So instead of clicking buy, stop and ask yourself what truly makes you happy. Ask yourself how much money you need to make for the life that will bring you joy.
Lifestyle creep is perfectly understandable, and probably more common than you think. However, as soon as we notice it sneaking up on us, it’s important that we stop, and reassess our decision making and spending. Every single one of us longs for convenience, comfort and luxuries, yet it is important that this does not come at the cost our long term and much more significant financial goals.
Do you have a question you’d like Dav to answer? Email us and let us know. All responses are opinion only and do not constitute financial advice