Earning more while spending more can leave your finances unchanged. Learn how to recognize, avoid and reverse lifestyle creep.

Getting pay raises is exciting. Extra money means you can buy more and experience more. Things that were once special-occasion luxuries become everyday treats. You may move to a nicer apartment. Vacations become more upscale. There’s nothing wrong with spending more as your income increases, but if you feel just as squeezed as ever, you may be experiencing lifestyle creep. This happens when “normal” slowly becomes a habit of spending more without paying attention to overall finances. Despite making more money, you still feel stretched thin financially.

How lifestyle creep shows up

Lifestyle creep can show up no matter how much you make. Even high earners can find themselves spending every dollar they earn and taking on debt to support their upgraded lifestyle. It’s less a money problem and more of a behavior problem.

One reason lifestyle creep goes unnoticed is that it’s often a result of many small decisions. Think better-quality groceries, more Uber rides, another subscription and multiple streaming services.

Another sign of lifestyle creep is social comparison: seeing others spending on nice things or making frequent purchases pushes some people to feel like they need to keep up. Over time, these spending habits can strain personal budgets and make it difficult to reach financial goals.

How to avoid and reverse lifestyle creep

To avoid lifestyle creep, the best thing to do as you get raises is to be intentional about where the extra money goes. Automating savings is a hassle-free way to set aside money so you’re not tempted to spend it right away. Of course, you can still treat yourself to upgrades, but do so selectively. Choose one or two things that you care most about and improve those. Live with the status quo on others.

If you struggle financially due to lifestyle creep, here are ways to reverse the situation:

• Review spending amounts and frequency. There are two simple ways to gain understanding of your spending: either record every purchase and bill paid, or review your credit card and bank statements. The method you choose doesn’t matter as much as understanding where your money goes.
• Identify quick wins and implement them right away. For example, eating out is more expensive than cooking at home. If you eat out four times a week, cut back to twice a week. You can make your grocery dollars go further when you use coupons and loyalty apps. Plus, check out our tips for eating well without overspending.
• Create a budget and—you already know the chorus—stick to it. If this is new to you, our free budgeting resources will show you how. If you prefer personal help, contact a GreenPath financial counselor. GreenPath financial counseling services are free to Consumers members.
• Delay purchases and seek alternatives. Overspending is often the result of impulse buying. Adopt a policy of waiting at least 48 hours before placing any online orders (some people wait 30 days). Often, the desire for something disappears with delay. If you still want or need the item when the waiting period is up and you can afford it, buy it. Also, explore cheaper ways of getting the things you want, such as waiting for a sale or buying from a thrift shop or a seller on Facebook Marketplace.

Focus on gains rather than what you go without

It’s not easy to realign spending habits after lifestyle creep takes hold. To gain momentum and motivation, focus on how scaling down on spending benefits you. Lower expenses give you an opportunity to save money for goals like building an emergency fund or a down payment on a home. Or you could invest your money for long-term goals like retirement or a child’s education.

Initially, getting lifestyle creep under control may feel like you’re missing out, but limiting spending is a skill that will get stronger the longer you do it.

 

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