Lifestyle Creep Could Be Killing Your Savings, So How Can You Avoid It?

While you may never have heard of the term ‘lifestyle creep’, you’re likely to easily understand what it means. Essentially, lifestyle creep, also known as lifestyle inflation, is a fancy way of saying that as we earn more, we’re more tempted to treat ourselves and to make up for all the things we were going without before.

This could mean something small like enjoying a more frequent night out or a holiday, or it could also be something more significant like renting or buying a nicer place and upgrading your car, explains Natasha Janssens, Certified Money Coach at Women With Cents.

“It can be a slippery slope, though, because these treats can become more frequent and turn into a habit, and before you know it, you are in the same situation you were before,” she says. “You are earning more money and yet your bank balance remains the same.”

So, seeing as you’re likely not keen to be earning more but still not able to save anymore, what are some ways you can avoid lifestyle creep? Ahead, Janssens share four strategies to start.

Set a Budget and Have a Savings Goal

We are wired to spend what we see, which is why waiting until the end of the pay cycle to save what is left over is rarely an effective strategy. You are better off setting some boundaries around your spending. An easy way to do this is to transfer money you want to save and money you need for bills into another account as soon as you get paid, and then living off what is left.

Also, consider setting a savings goal. Having a goal to focus on and a motivating reason not to upsize is the key to resisting the urge to upgrade your lifestyle. It has never been harder to resist this temptation. Again, we are programmed to prioritise our needs today over our needs tomorrow. Add in social media and constant advertising and pressure to keep up, and it becomes very hard to say no to nicer clothes, holidays or going out.

Challenge Your Reasoning for Upgrading

The thing to keep in mind is that we adjust so quickly to our environment. So, while a new car or bigger home can wow us for a while, research has found that after a few months these luxury items don’t make us any happier than we were before. With that in mind, challenge your reasoning for upgrading and be honest with yourself. Is it really something you need, or is there another emotion underpinning the decision?

For example, if it’s ‘I work so hard at least I can have a nice place to come home to’, perhaps this is a sign that your job is wearing you out or not bringing you fulfillment. In that case, you are better off addressing this than spending money to fill a void.

Generally, Increase Your Self-Awareness

Spending money is more often emotional than it is rational. So, checking how fulfilled you are on a regular basis is key to controlling our spending. Typically, we spend to fill a void or address an uncomfortable emotion.

Maybe we don’t feel good enough or successful enough so we think having a nicer place will make us feel better about ourselves. Maybe we are bored and want a change, so rather than changing jobs or leaving the unhappy relationship, we buy a car or book a holiday.

So, getting to know yourself and how you feel is really important. We are so focused on tuning out and being plugged into our devices and the virtual world, we have lost the ability to tune into ourselves. This is where practicing mindfulness and journalling can help us to check back in.

How often do you take time out to do something that brings you joy or lose track of time? Doing something creative or something to help others in need are all great ways to help us feel more fulfilled. The more fulfilled you are, the more immune you are to materialism and the need to upsize your life.

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