6 tips to avoid lifestyle creep
When you get a significant raise at work or suddenly make a lot more money, it can be exciting. You may feel less concerned about money matters if this happens. While it can be nice to reward yourself, it’s easy to feel a fluctuating lifestyle. As your income grows, you can adjust your spending to meet this new financial standard. But before you know it, you might be spending most or all of your extra income.
Lifestyle drift is when your standard of living increases as you earn more money. While celebrating a new job or an increase in income can be fun, you want to avoid too much lifestyle drift. You may decide to adjust your budget to buy healthier foods or to buy new wardrobe items for your new job role. But you probably want to avoid the upgrade all areas of your life – because it is expensive. For example, buying a car, going out to eat several nights a week, and treating your friends when you go out for drinks can drain your funds quickly. This can make it difficult to save the extra money you’ve earned.
Luckily, there are steps you can take to prevent lifestyle abuses. Here are some suggestions.
One email a day could help you save thousands
Expert tips and tricks delivered straight to your inbox that could help save you thousands of dollars. Register now for free access to our Personal Finance Boot Camp.
By submitting your email address, you consent to our sending you money advice as well as products and services which we believe may be of interest to you. You can unsubscribe anytime. Please read our privacy statement and terms and conditions.
1. Automate your savings
Saving money is a top priority when it comes to personal finance. Raising extra funds is often a great time to reach your financial goals, like saving for an emergency, investing for the future, or saving money for a car or house.
When you automate your savings, there is no excuse for forgetting to save. It’s easy to automate your weekly, bi-weekly or monthly savings, and you can put those funds directly into your savings account. This can help you make sure that you don’t spend your money on fun things until you’ve prioritized your savings goals.
2. Avoid making big changes in your life
You can avoid lifestyle drifts by making big changes in your life, like turning your rental into a fancy apartment, buying an expensive house, or buying a new luxury vehicle. Fight the urge to do these things soon after you start making more money. Instead, take the time to plan for all the big life changes and expensive purchases. For example, you can consider planning a major purchase at least three to six months in advance and assessing whether the purchase is still worth it over time. It also gives you more time to save on expenses and can help make sure you have enough extra cash for your other needs as well.
3. Don’t waste your budget
If you were budgeting before your income increase, keep doing it. There may be things you need to adjust, like increasing your savings goals, but don’t assume that you no longer need to budget just because you have more money. Set a budget and stick to your plan.
4. Treat yourself – sometimes
Instead of feeling the urge to rush out and spend all your new money, consider spending some to treat yourself occasionally. For example, you could do a monthly activity or buy yourself a fun gift each quarter. This way, you can celebrate your successes and spend some of your money on yourself, but you don’t have to worry about going overboard and overspending.
5. Choose improvements that will improve your life.
If you feel the need to improve some area of your life, you may want to consider paying for items or experiences that will improve your life in some way. Consider whether the upgrade will feel rewarding, without going over budget. You might consider investing in lifestyle changes that will help you:
- Reduce your stress
- Improve your relationships
- Win time
- Have more authentic happiness
- Improve your skills
- Achieve your health goals
- Work towards long-term financial goals (like saving for a down payment)
6. Who do you spend time with?
Consider who you spend your time with and how they impact your finances. If you are dating friends who like to spend money all the time or have expensive tastes, this might not be the best way to save your own hard earned funds. It’s good to be friends with people who have a higher income than you, but make sure you don’t feel like you have to spend more or change your lifestyle. If you are feeling pressured, it can be a sign that it’s time to socialize with different people.
By following these tips, you can maintain better control over your finances and avoid lifestyle abuses. Earning extra cash can be great, but make sure you spend it in a way that improves your life and supports your personal goals. If you want to read more financial tips, check out our personal finance resources.