As time goes on, we acquire more stuff. More commitments, extra subscriptions, more expensive habits. We also tend to spend money in line with our earnings. So although your salary may go up, you might not notice the increase because of the lifestyle creep (which is also knows as ‘lifestyle inflation’). But it may be possible to control it, with the right tools. Here, I explain.
What exactly is the lifestyle creep?
The term lifestyle creep refers to the way that humans tend to use more, or spend more, just to live. Former luxuries start to be persevered as necessitates, so our basic costs go up.
Why is it a bad thing?
A lifestyle creep doesn’t have to be a negative thing. If you’re happy with your costs increasing slightly, you can afford it and you want to enjoy the little extras, then that’s fine. But the key is being aware and a lot of people don’t see the lifestyle creep at play. It could be that the money would be better spent elsewhere, but the expense has become a habit, so you barley realise that you’re spending that extra cash.
Sometimes the cost of living rises quicker than our income. When this happens, it is natural to dip into savings and to even take on more credit. We can’t always control our salary and we can’t control how much things cost, but we can try our best to fight against the creep.
Could it lead to unnecessary credit?
If your expenses gradually go up, then you may find, in time, that you’re unable to afford your lifestyle. You then may start accounting for this with your credit card. Popping the petrol on credit, getting your top-up shops on credit cards. It is easily done and if you don’t nip the issue in the bud early, you may end up building unnecessary consumer debt. I did this in my early twenties; when student credit cards lead to deeper overdrafts and loans.
Can you avoid lifestyle creep, or is it inevitable?
A lot of people report that they’ve seen signs of a lifestyle creep. It might be subtle, or it could be glaringly obvious. But it does have a sense of inevitability about it. It’s almost like life inflation.
If you’d like to control the lifestyle creep, so that it doesn’t impact your finances too heavily, there are steps you can take:
1) Do a regular subscriptions audit
We are often advised to cancel subscriptions that we no longer use, but how often do you check? And how deeply do you look into your subscriptions? I’d advise you to do a full audit every six months. Look at what you’re paying out for and if you want to keep certain subscription, then have a look at the different levels to determine if you could live with a lower subscription level. For example, do you need the £13.99 premium Netflix service? Or could you live with the £5.99 basic package?
2) Send your pay rise straight to savings
If you get a pay rise and you don’t want it to get absorbed by general costs, then send it straight to savings. If you never have it in your main account, then you’ll never miss it.
Instead of using your increase to soak up general life inflation, you could have that extra money adding up in a separate savings account.
3) Set a gifting budget
It’s natural to want to treat those we love and care about. But is it always necessary to go overboard? Just because you can afford to spend an extra £50 on your child at Christmas, doesn’t mean that you necessarily should. Especially if it will then become something that’s expected, or something you will feel bad about if you can’t repeat it next year.
To avoid this dilemma, you could set a gifting budget and stick with it. Or go with the 4-gift rule. Remember, if you do this, it doesn’t mean you can’t buy them an extra treat at a different time.
If you want to work out how much you can afford to spend on gifts, then my budget planner will help.
4) Be clear about your lifestyle needs and your wants
Needs and wants are very different things and sometimes the lines blur. Whilst I enjoy listening to my Spotify playlist, I do know that having the ability to listen to music without adverts is a luxury.
If you’re used to having something, then it can feel like you need it, so remind yourself of those little luxuries that you’ve started to take for granted.
5) Be mindful when ordering a takeaway
We all love the odd takeaway and there’s nothing wrong with that. But if you always order a pizza on a Friday night and you always grab a Costa Coffee on the way to the office, then you have to question if it is a treat, or if it’s become something you see as part of your usual routine.
To avoid takeaways becoming a habit, be mindful about the number that you’re consuming. Try popping one into your weekly meal plan. Plan for it, order it and enjoy it. But don’t then get another one tomorrow night.
6) Make your work lunches
You can save a fortune by making lunch and taking it to work with you. If you make a decision to treat yourself on a Friday then that’s one thing. But if you’re buying lunch from the local shop each day, then you have to access if this is a convenience that has become a habit just because you can technically afford it.
7) Think about your options at the supermarket
If you’re not on a strict budget, then you might want to buy the premium branded pasta, because why not? You can afford it after all. But if that pasta doesn’t taste any different, then perhaps your luxury pasta purchase is just another symptom of a lifestyle creep. No matter how much you’re earning, you should try to downshift (buy a cheaper version of a product) where you can. Remember, spending the extra isn’t going to enhance your life then it’s not worth it.
8) Consider a smart thermostat
The price of energy is increasing sharply and many of us are facing higher bills. If the prices are concerning you and you’d like to bring your bills down, whilst remaining warm at home, then you should consider installing a smart thermostat. You will have to have to pay out initially to install it, but over time you will save cash. My Drayton Wiser thermostat has saved me hundreds.
9) Figure out if paying is necessary
Sometimes we have the option to pay for something and we do, just because we can. For example, if you have a list of film recommendations from a friend and you can access two of the films for free and the third film will cost you £2.99 to view, you might be inclined to watch the paid-for version. Perhaps you perceive it to be a better film because it has a price tag, or maybe you just buy it because you can. If you choose to buy that film because you want to watch it more then that’s ok. But make sure you think about weather you actually want something before hitting buy. Don’t just do it on impulse.
If you think you’re spending extra cash without thinking, then my guide covering ways to save money on a tight budget may be helpful; as it will remind you that there are loads of places where you can make cuts.
Is it worth trying to control the creep?
You may be wondering if it is worth considering these additional expenses. The answer to that depends on your circumstances and just how big your lifestyle creep has been.
You don’t have to live your life without luxuries, but make sure you’re clear in your mind that it is a luxury, that you made a mindful decision to purchase. You should also keep in mind that if you have debt to pay off, or if you’re saving towards something special, then it may be worth making cutbacks and fighting that lifestyle creep.
If you enjoyed this article, then check out my money section.