Lifestyle creep: Are you guilty of it?

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Lifestyle creep is what happens when you spend more because you earn more. It might be upgrading your gym plan after a promotion at work, trading in your Toyota for a BMW, or spending more on those little luxuries like clothes and shoes, just because you have the extra cash in your account.

Put simply: your lifestyle creeps up on your income.

Why should you avoid lifestyle creep?

If you crank up your expenses when your income increases, it basically means you’re not earning ‘more’ any longer.

It’s huge when you finally get that promotion and you see the extra money flow in, especially if you’ve been struggling to keep your head above water. But then, if you just spend all the extra cash on things you don’t actually need, you’re back at square one and you’ll feel the same as you did before — battling to make ends meet.

What you do with your extra income is what separates those on their way to financial freedom from those who will ultimately live from paycheque to paycheque.

5 tell-tale signs of lifestyle creep

  1. You don’t think twice before buying something anymore.
  2. You own lots of items that you once considered luxurious and aspirational.
  3. Your savings are stagnant.
  4. You feel like you can’t make it to the end of the month even if you receive a raise.
  5. You don’t invest more.

Why do we fall victim to lifestyle creep?

It’s so easy to spend more when you earn more, because hell, you worked hard for this! Why work if you can’t enjoy the fruits of your labour?

This is true to a certain point, but it’s also important to think about the long-term benefits of working hard and earning more…

Most of us would like to retire comfortably one day, perhaps retire earlier than our parents did, and enjoy some of the finer things in life. But here’s the kicker: the finer things in life come from saving and investing! It’s a downer to have to save, save, save — we know — but every small expense is a leak that can easily sink a great ship.

Okay, so what should I do with my extra income?

If you’re not sure what to do with your extra income, it probably means you haven’t defined your money goals clearly.

If you don’t have goals, you won’t know where you’re going and you can easily get lost. Try answering these questions to determine your goals. Once you’ve done that, you can work out where to save or invest your money.

There are hundreds of ways to save and invest. If you’re overwhelmed, it’s worth speaking to a financial advisor who will be able to help you put your money in the right place for long-term growth.

Start today and you’ll discover how rewarding it is to grow your wealth in a real sense, rather than just using your extra money to appear wealthy. Let’s go!