Lifestyle Creep, otherwise known as Lifestyle Inflation, can quickly lead to a sea of troubles, but what is lifestyle creep? This post is all about my experience and how you can avoid lifestyle creep.
You’ve probably heard the term Lifestyle Creep being tossed around before – but what is it, and how can you avoid falling into its trap? When your lifestyle is flexible, it allows you to slide a few plates, so to speak. This is a good thing. It can help you take a few extra vacations a year, go out to eat with your friends more often, and give you the ability to splurge on things without feeling overly guilty about it. Friends have even said that my financial flexibility has allowed me to “live the dream”. However, if you fail to see the difference between living an actual dream and lifestyle creep – there could be problems ahead.
What is Lifestyle Creep? My Experience:
Lifestyle creep is a dangerous trap. It’s similar to the ‘keeping up with the Joneses’ mentality in the fact that the big problem is you’re not comparing yourself to your ideal self. Instead, you’re comparing yourself to people who would be happy with a different life than the one they have currently. You may even find yourself in a situation where you move from being content with what you have to always want more.
Lifestyle creep is when you get used to having more and more money. You get used to living the same lifestyle with an increase in income, doing things like traveling overseas, eating out at restaurants, spending on entertainment, etc.
I have experienced lifestyle creep firsthand. When I started working I was earning £600pcm and had no expenses as I was living at home (nice!) so that £600 was all mine.. and believe me, I spent it.. and I spent it fast! Fast forward to 2016, I’m earning £1,200pcm, enjoying nights out, the occasional takeaway, and getting used to life in London. That £600 I used to have all to myself? Now was my rent alone (for a tiny single bedroom in Elephant and Castle). Cut to 2019, I’m earning £850 a week. I eat out almost every day, take taxis everywhere, and buy whatever the heck I want. And still putting end-of-the-month groceries on my credit card. In a never-ending cycle of paying it off and maxing it out again.
Lifestyle creep is how, although I was earning a hell of a lot more, I was still in a debt cycle. I believed that my salary was my lifestyle. Now that I was earning ‘that lifestyle’ I was living that lifestyle. I still even managed to convince myself I was savvy by booking my weekly train in standard class, using ticket splitter.
I Thought This Was How Life Was Meant To Be
Simply put, I could have survived on my £1,200 wage nicely, and afford to live in Central(ish) London. I could afford nights out (as I rarely paid for drinks.. girls, make sure the bartenders are your friends!), I took the odd taxi after a late night, and when I felt lazy I ordered takeaway.
What happened is when I earned more money, I believed that I had to spend that money. It’s how you show everyone around you that you’re doing well. Look, mum and dad, I can afford to take taxis everywhere and never cook! Were they proud? Coming from a council estate background, yes! But did I amount to any savings or any form of financial stability? Nope. So when I took a massive £26,000 pay cut, I had to learn hard and fast how to live on a smaller wage again.
This is what I should have done.
When I took my new freelance contract and saw how much I would be making, I should have created a plan. Yes, I should have celebrated and enjoyed myself a few times, but then go back to my normal way of living and save the excess. There was no reason my expenses should have exceeded my wage, yet they did, every week. It’s true, my expenses went up as I was now traveling for a living instead of being in one location. This meant added travel and rent costs (as I paid rent for my London address and weekly accommodation), and the occasional eating out was necessary as cooking is not easy in hotels! (This is why the pay was so high, to cover these expenses) but had I had a budget in place, I would have been able to save, pay off debt, and have fun.
It’s strange, not once did I question why I never had money. I wondered why my friends on the job were able to save for their second property and even start building a house in France, but I just assumed it was because they earned more than me (and they did, but not by that much!). I was always taught that having more money meant spending more money. It’s why rich people have nice cars and big houses. Now I know that most of those people use credit and financing methods to have those shiny things, and the truly rich people drive 5-year-old cars, live in their first house, and don’t owe anything to anyone.
If you find yourself getting a pay increase, or come into some unexpected cash, do this: Make a plan.
There’s a strong possibility your expenses don’t need to increase, so keep living your life as you were. Buy a little something to reward yourself for your hard work, and save or invest the rest. Let’s build wealth, not spend it.
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