So you got a new job that pays more than your previous one. Or perhaps you just got a raise after surviving on a certain salary every month for a long time. We might think that, the more we earn, the more we should spend. This isn’t necessarily the wrong way to think. However, it could be the case that we end up with a lot more than we need, as we slowly but surely accumulate stuff and live in luxury like we never did before.
What we once thought of as ‘luxuries’ are now ‘necessities’ as we’ve become so used to having them. That designer handbag you always dreamed of? You can now afford more than one. Dining at restaurants run by celebrity chefs? It seems to be where you go to more often now, than the food courts you were always used to eating at before.
Spending more if you can afford it isn’t a problem. The issue is when it encroaches on your savings and financial goals.
You might feel like you deserve these things as you’ve worked hard for them. After all, if you’re not going to treat yourself, who’s going to do it? And, in the aftermath (although it’s not technically over) of the covid pandemic, you might think that you have to spend more now because you didn’t get the chance to really enjoy yourself for a year or two.
Spending more if you can afford it isn’t a problem. The issue is when it encroaches on your savings and financial goals. This is known as lifestyle creep. It’s when your income increases, but your spending increases by a greater rate. It’s when things that were formerly thought of as ‘luxuries’ are now the norm.
So, even though you’re actually earning more money now, you somehow end up counting down the days till payday as you’ve overspent. And, because your expenses tend to happen gradually over a long period of time, you might not notice it at first, as it slowly ‘creeps up’ on you.
Some signs of lifestyle creep are:
- Your savings haven’t grown despite your increased income
- You’re buying more things or going out more often
- You’re nervous every time you check your bank balance
- You have no idea where your money goes every month
- You feel like you can’t go back to how you used to live
Here are seven ways you can avoid lifestyle creep:
- money saving tips