What is Lifestyle Creep?

Lifestyle Creep is a relatively new term to me, but the concept is something I’ve worked on throughout the years. I heard this term from Diane, a client who told me she wanted to avoid lifestyle creep once she started a higher paying job than she’d ever had before.

Lifestyle creep means getting caught up in the cycle of spending more money when you make more money. So then it doesn’t seem like you are even making more money because it’s already being spent. This is something that can easily happen.

You get a raise and go YOLO, living that bougie lifestyle, upgrading so that luxuries are now the norm.

There is nothing wrong with this, but if you are trying to build long term wealth, it’s something to be aware of and plan for.

You work hard and deserve to treat yourself. Just make sure that you are taking care of all the basics first, including putting money away for savings and investing.

I’ve had times when lifestyle creep could have taken over, but I didn’t let it.

Once, I received a surprise inheritance of $20,000 after a family member died. I had no idea I was going to inherit that money, or any money for that matter. It was a complete surprise.

I decided to keep my expenses the same and invested that shit. I didn’t let lifestyle creep up on me because I knew that money would go further if I invested it and let it grow for decades. I’m aware that investing would change the trajectory of my life and that of my community.

Did I think about buying something instead? Yes. I could have easily bought a car. A sports car. I thought it would be great to have a sports car. But I was making $40k at the time. So even with the surprise money, I really couldn’t afford to buy a sports car.

Did I even need a car? Not at all. I lived walking distance to my job. I let myself imagine what it would be like to have a sexy sports car, but then thought about how it would lose a lot of value quickly. And that I really didn’t need it. It’s hard to not act on impulse and spend when you have a ton of extra cash. I see this a lot in our community – people spending on expensive objects to either prove to yourself that you’ve “made it” or to show off your wealth to others.

If you are in a situation with extra money, I really want you to think about, okay, do I want to buy physical objects because they make me happy or because they’ll fill some sort of void inside of me? The capitalist state wants us to feel like we have to buy things in order to be whole. Think on it a bit before you spend.

I’m not completely immune to lifestyle creep. I fell for it when I got my full time job as a stockbroker. I’d had a solid salary after years of working side hustles and never making more than $30k. “I had made it!” I thought. So, I splurged.

I rented an apt in the fanciest building in Indianapolis,  Indiana, where I moved for the job. It was either Indiana or Dallas…and I’d already lived in San Antonio, so I thought I’d try out the Midwest. The building had a gym, a bar, reception, and bicycles you could rent. My studio apartment was the nicest place I’d ever lived. I thought living in this bougie apartment would make me happy.

But it didn’t. I had this false idea of what success looked like. I thought the apartment would make me feel good about myself and make my life great. But there were so many other things going on in my life. I was still depressed. I didn’t really have a circle of people who got me in Indiana, and spent a lot of time alone. Then, COVID hit and I was even more isolated. Even though I had achieved having a fancy place to live. I now understand that my self-worth is not tied to an apartment. And that spending on physical things is not always going to make me happier.

Buying physical things is the number one symptom of lifestyle creep.

I was listening to a podcast the other day about minimalism, and they said that 90% of all storage units in the world are in the United States.

90%! It doesn’t surprise me at all because we’re so used to buying things. Amazon can deliver straight to our door at the click of a button. People are leading some unfulfilled lives and filling the void with items.

I’m not here to shame you. I just want to make you aware of lifestyle creep so that it doesn’t take you by surprise.

When you’re ready to avoid lifestyle creep and change the trajectory of your financial future, book a call with me!

Let’s make sure that you have your finances set up to invest in what is truly important to you.