I’m often asked “how can I avoid lifestyle creep?” or “how can I stop living paycheck to paycheck?” The answer is simple: live below your means. I’m currently living off of $50k a year, including my couch surfing/yoga/lift-assistance stipend, which is all I need for me to live the life I want. But, it’s important to note that I’m not living paycheck to paycheck. I maintain a healthy savings account, pay off debt, and have no student debt.
There’s a disease that walk around in the world now, and it’s called “Lifestyle Creep”. As we all know, now that we’re all living longer, we’re afraid of dying. We want to leave a memory behind. We want to leave a legacy. We want to leave a mark.
There’s no doubt about it: as life gets busier and more stressful, some of us slide into the “lifestyle creep” pattern of doing things we don’t necessarily want to do. These can range from buying stuff we don’t necessarily need, to neglecting to do things we used to enjoy or that can help us be productive.
When your quality of living begins to exceed your real income, this is known as lifestyle creep. It’s usually associated with earning more money without saving more money – forsaking key financial objectives like setting up a solid emergency fund or saving for retirement in favor of purchasing a bigger home, better vehicle, or taking a luxurious trip.
While it’s tempting to spend any additional cash as soon as you have it, lifestyle creep puts you and your family at danger financially. After all, there’s no assurance that you’ll remain at the same salary level for the rest of your life.
How to Stay Away From Lifestyle Creep
We contacted Certified Financial Planners, financial advisors, and other personal finance professionals to help you avoid lifestyle creep, also known as lifestyle inflation. Here are 38 strategies to keep from succumbing to lifestyle creep.
1. Prevent lifestyle creep before it becomes a problem.
Maintain a modest level of living for as long as possible, especially if you’re a new graduate, advises Danielle R. Harrison, a Certified Financial Planner at Harrison Financial Planning in Columbia, Missouri.
“Rather of purchasing a brand new vehicle, phone, or condo, use that additional cash to pay down your student debts or save as much as you can for both short- and long-term goals,” Harrison advises. “It is much simpler not to realize what you are missing if you have never experienced money.”
2. Make a financial plan
Andrea Woroch, a savings guru, asks, “How can you monitor your spending if you don’t know where it’s going in the first place?” “A budget directs your money and prevents you from squandering it on unimportant items.”
3. Set a monthly savings target.
Every budget should have a line item for “savings.” Before allocating or increasing your discretionary expenditure, pay yourself first.
4. Use the 50/30/20 rule as a guideline.
Different people have different ideas about how much of your monthly income should go toward savings and retirement objectives. Furthermore, depending on your whole financial background, the answer is likely to differ.
However, if you’re searching for some general recommendations, try using the 50/30/20 rule, which assigns 50% of your income to necessities like rent and utilities, 30% to discretionary spending, and 20% to savings.
5. Maintain a low amount in your bank account.
“Keeping a low balance in your checking account will make you feel less inclined to spend,” says Shang Saavedra, a personal finance blogger at SaveMyCents.com.
6. Make saving a habit.
Set up direct deposit to guarantee that you have limited access to extra money.
Nicole Gopoian Wirick, a Certified Financial Planner in Birmingham, Mississippi, says, “For many of us, money are ready to spend the minute they reach our bank account.” “To prevent this, I advise customers to set up a direct savings plan in which money is sent directly from their bank account to a savings and investment account.”
7. Aim to contribute the maximum amount to your retirement account each year.
Americans are permitted to contribute a certain amount of money to designated retirement accounts such as 401(k)s, individual retirement accounts (IRAs), and Health Savings Accounts each year (HSAs). Employees may contribute up to $19,500 to their 401(k) plan in 2023, for example.
If you strive to meet these limitations each year while avoiding lifestyle creep, you can build a substantial retirement fund. At the absolute least, you’ll be able to…
8. Automatically raise the stakes
“Many companies are now providing automatic 401(k) deferral increments, which will raise your contributions to your employer-sponsored retirement plan by a set percentage annually,” Harrison adds. “Some people even time it to coincide with yearly merit raises or bonuses.”
9. Think about the difference between net and gross revenue…
Before altering your spending patterns after getting a raise or bonus, be sure you know how much extra money you’ll have after taxes.
10….then make good use of increases.
“Use the extra money to pay down debt or put more money aside,” Harrison advises. “Any money left over may then be utilized to improve your quality of living.”
Calculate the yearly expenses.
Commitments made on a monthly basis may be misleading.
According to David J. Haas, a Certified Financial Planner of Cereus Financial Advisors in Franklin Lakes, New Jersey, “buying a vehicle with a $400 monthly payment vs. one with a $250 monthly payment is just $150 more per month, but a substantial $1800 more per year.” “I suggest creating a monthly and yearly budget and examining any new financial obligations through the perspective of both budgets.”
12. Keep track of your expenditures
A budget is only useful if it is followed. To keep track of your monthly expenditures, use a budgeting software or a basic spreadsheet.
13. Set up spending notifications
When a big transaction hits your checking account, many banks, credit card issuers, and budgeting apps will send you a text, email, or push notice. These alerts may help you avoid making big purchases by keeping you informed about how much money is available in your account at any one moment.
14. Go through your bank and credit card statements.
As we previously said, apparently little monthly expenditures may pile up over time. Examine your bank and credit card accounts for “zombie charges,” which are recurring subscriptions, renewals, or payments for products or services that you no longer use or need.
15. Review your budget on a frequent basis.
Rick McCallister, a Certified Financial Planner in Torrance, California, advises, “Re-evaluate every year whether or not you’re saving enough.” “Make any required adjustments.”
16. Don’t spend money on things you don’t care about.
“Instead of living a life that our friends and the media want us to live, create a life that aligns with your values,” Saavedra advises. “If I don’t want a nice vehicle, I don’t have to have one.” If I don’t want a large home, I don’t have to have one.”
17. Put yourself in the shoes of a pandemic.
“Covid-19 has resulted in reduced costs in some areas for a lot of people,” says Jason L. Williams, a Certified Financial Planner in McLean, Virginia. “I recommend that individuals consider how much pleasure spending gives them before just adding it back without thinking about it once they have the ability to do so.”
Set clear financial objectives.
Otherwise, when your money rises, you’ll be more susceptible to common spending traps.
19. Keep track of your efforts toward achieving them.
“Review your objectives and make sure you’re on track to live the life you desire in the future,” says Molly Ford-Coates, founder and CEO of Ford Financial Management. “Having your objectives in front of you reminds you of why you’re doing what you’re doing.”
20. Seek advice from a professional
If you have a complicated account or need further assistance, a financial advisor or certified financial planner may assist you in setting up more sophisticated savings plans.
21. Make use of your friend system
“Having someone hold you responsible for your financial choices may be a great way to prevent lifestyle creep,” says Forrest McCall, founder of personal finance website Don’t Work Another Day.
Check in with this individual on a frequent basis to ensure you’re not getting too far away from your financial objectives.
22. Try out two different checking accounts.
“I have my clients open two separate checking accounts to set them up for success,” Stephanie Trexler, a Certified Financial Planner, CEO, and Financial Advisor at Golden Goose Wealth Planning in Grand Rapids, Michigan, explains. “The first is for monthly payments that are set up on auto-pay. The other is for anything else, including spending money for fun.”
Establish a genuine emergency savings account (number 23).
Experts suggest having enough money put aside in a dedicated savings account to cover three to six months’ worth of expenditures if you don’t have any other savings objectives. Bonus tip: To get the most out of these funds, search for an account with a high annual percentage return (APY).
24. Make on-time payments on your credit cards each month.
Avani Ramnani, a Certified Financial Planner at Francis Financial, advises against carrying balances. “This ensures that you only spend what you have in your bank account.”
25. When not in use, place the plastic on ice.
“Cut up your credit cards and move solely to utilizing cash or a debit card,” Ramnani advises if you start overcharging. “This will limit your spending to what you have in your bank account.”
26. Don’t get out of your first house.
If you don’t need a bigger house, resist the temptation to “move up.”
“If the smaller property continues to meet your requirements, you may save thousands of dollars in moving and closing expenses, as well as much more with the lower expenditures connected with your ‘starter’ home,” says Joyce Streithorst, a Certified Financial Planner in Melville, New York.
27. Stay away from being a “home poor” person.
If you’re unsure about how much to spend on a property, the government defines homeowners who spend 30% or more of their income on housing as “cost-burdened” or “house-poor.”
28. Carefully consider all sources of funding.
It’s preferable to live within your means than to live beyond them, so think carefully before taking out a loan or making any purchase that may put you in debt.
29. Make a debt repayment strategy.
Prioritize debt repayment above spending if you’re already in debt. You may use a variety of methods, and we’ve compiled a list of 50 of them right here.
30. Keep a decent credit score.
A high credit score allows you to get the best credit card, mortgage, and other loan rates, which frees up more cash for saving and smart spending.
Making on-time payments, keeping credit card balances low, and minimizing the number of new credit applications you submit at any one time may help you retain excellent credit. To learn more about credit scores, go here.
31. Keep your screen time to a minimum.
“It’s difficult not to desire for more when we’re bombarded with pictures of other people’s “perfect” lives. Spend time figuring out what matters most to you,” Harrison advises. “Spending more on consumer goods does not make us happy in the long term because of the hedonic treadmill.”
32. Always be on the lookout for a good deal.
“Just because you have more money doesn’t mean you should squander it because you don’t want to search for ways to save,” Woroch adds.
There are many savings programs, browsers, and websites that may assist you in rapidly comparing prices and finding discounts. Check out this list of 50 money-saving ideas.
33. Purchase used expensive items
“I visit secondhand shops or online sites like Poshmark and eBay for some of my favorite luxury items,” Saavedra adds. “I constantly remind myself, ‘after you use anything new once, it’s used.’ So, apart from the cost savings, I don’t see much of a difference between purchasing used and new.”
34. Make a commitment to save at least a portion of your windfalls.
Avoid the temptation to spend all of your tax returns, yearly bonuses, and other windfalls on expensive desires rather than necessities. Nonetheless…
35. Give yourself some wiggle room
According to Scott A. Bishop, a Certified Financial Planner in Houston, avoiding lifestyle creep is comparable to deviating from a balanced diet. “Most people struggle with restricted diets, just as they struggle with restrictive (seems punishing) budgets. Enjoy part of your achievements if you are financially successful, but pay yourself first.”
36. Create a “treat yourself” bank account.
Control splurges by creating a separate account for them. Inspired by Amy Poehler’s comedy “Parks and Recreation,” Joseph R. Stemmle, a Certified Financial Planner in Richmond, Virginia, maintains a “treat yourself” account.
“I know I have money put aside if I want to reward myself or spend on something, and it won’t affect my total budget,” he adds.
37. Look for fresh methods to ‘inspire pleasure.’
“Rather of purchasing, focus on creating experiences and spending time with family and friends,” advises Marguerita M. Cheng, a Certified Financial Planner in Potomac, Maryland.
38. Begin a side business
If you’re longing for more, think of new methods to make extra money to put toward consumption or savings. Here are 49 different side hustles to think about.
MediaFeed.org created and syndicated this story.
NazariyKarkhut is the author of this image.
Skowronski, Jeanine
Jeanine Skowronski is a personal finance writer and content strategist who has worked as the Head of Content at Policygenius, the Executive Editor of Credit.com, and as a columnist for Inc. Magazine. Her work has appeared in publications such as The Wall Street Journal, American Banker Magazine, Newsweek, Business Insider, and CNBC.
Frequently Asked Questions
How do I stop my life creep?
To stop your life from creeping, you can take the following steps: 1) Stop playing games and watching TV. 2) Get a hobby that will keep your mind busy. 3) Spend more time with friends and family.
What is lifestyle creep and how should you manage it?
Lifestyle creep is when your lifestyle changes so much that you are no longer able to maintain the same level of happiness and fulfillment in life. Its important to recognize this early on, as it can be difficult to reverse course once youve gone too far.
What is the 50 30 20 budget rule?
The 50/30/20 budget rule is a guideline for spending money on your startup. It means that you should spend no more than 50% of your total budget on marketing, 30% on product development and 20% on operations.
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