Lifestyle Creep
Day 172 / 365
Ever wondered how most of your friends complain about not being able to save much? Different people might be earning a different amount of money, and they may be living in cities with different levels of expenses. But only one thing would be constant. Every one of them would feel that their salary isn’t enough for the amount of expenditure they are doing or want to do. One of the factors that contribute to this is something called Lifestyle Creep.
What is Lifestyle Creep?
As a person’s income increases, their standard of living increases as well. And this increase is slow, and kind of creeps up on them. Which is why people find it so surprising that they are not left with much savings at the end of the month even with an increased salary. This is known as Lifestyle creep.
As your income increases, you feel like rewarding yourself a bit and that translates into expenses. Single time expenses, like new clothes, or dinner outside to celebrate are fine. The problem arises when you think you can afford repetitive expensive. For example, renting a more expensive apartment, or taking subscription of a better online streaming service. All such small expenses add up over time and you soon find yourself at the same place you were financially before you got the big raise.
So how do you avoid it? Just be aware of it. And most importantly, save first and spend seconds. Don’t save what’s left when you have spent money on your needs and wants. Save first, then spend the money left however you desire.
This post is part of my 365 Day Project for 2019. Read about it here
Yesterday’s blog — When the time comes