How to Avoid Lifestyle Creep

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Palm tree from a trip to New Orleans

New Orleans, US

Lifestyle creep is a more palatable way of saying as your income increases, so do your expenses. To build long-term wealth and save for shorter term, but just as important, goals you want to do the opposite: Increase your income regularly, and keep your expenses as low as possible. How I do this is by keeping my spending the same as before the raise or picking up a side hustle(with some exceptions*).

Here’s how I avoid lifestyle creep

  1. Putting the extra money out of sight: a separate, an online only bank account is my personal favorite. Since it takes a few days to transfer funds from my Varo account to my main account, I just leave my card at home and don’t have the details saved anywhere, so if I want to spend the “extra” money, it’s a hassle, which works as a pretty good deterrent.

  2. Having a specific dollar goal for the income increase: Are you saving for a house(I am… slowly)? An international trip? Do your want to pay down a big chunk of some debt? Earmark the money so it’s not rolled into your day to day budget.

  3. Reviewing my budget: The beginning of a new quarter is the perfect time to analyze spending habits for the last 60-90 using your bank and credit card’s spending reports. Seeing if and where expenses can be reduced and/or money can be shifted to new priorities helps so much in ensuring that my income increase remains earmarked for the goals I set for it.

As I get further into my late twenties, and get closer to moving into my dream career field, I know that a large income increase is forthcoming. I want to make sure when that happens my money habits are so ingrained that if I'm making $75,000 or $225,000, my expenses remain more or less the same, so I can focus on building lasting wealth for myself and my family. Avoiding lifestyle creep is one of the most effective ways to do that, in my opinion.

*Why with exceptions: I don’t think life is very fun if you’re only earning and saving. In line with my personal money philosophy, I think it's important to spend on planned experiences that make bring joy and fulfillment… as long a you budget for it. So take that international trip, skydive, ride the hot air balloon, get the new tattoo… maybe just don’t do all these things in a six month span.