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Avoiding ‘Lifestyle Creep’: How to cut your bad spending habits

April 24, 2024

As we earn more, it becomes easy to succumb to the temptation of upgrading our lifestyle, too. It begins with the occasional indulgence, but before we know it, our expenses are quickly catching up with the level of our income. This phenomenon is called ‘lifestyle creep’ or ‘lifestyle inflation.’

It occurs when an individual spends more on luxuries instead of saving for their future. This shift in mentality often happens when they advance in their career or earn a higher salary, causing them to view reward as a necessity rather than a choice.

Lifestyle creep can happen in both our daily small and big life choices. To assess if you have fallen into this trap, take our bingo quiz below:

There are practical ways to prevent lifestyle inflation from dominating your finances. In this blog, you will learn to set money boundaries and be more mindful of your spending habits. Read on:

  1. Create a budget
    One way to prevent lifestyle creep from sneaking up on you is to have a budget in place. By keeping tabs on your monthly expenditures, you can savor the rewards of your hard work without overspending. When it comes to budgeting, there’s no one-size-fits-all solution. However, you may want to follow the 50-30-20 rule as a starting point: allocate 50% of your income to essential needs like groceries and utilities, 30% to discretionary expenses, and 20% to savings or investments.
  2. Automate your savings
    It’s crucial to increase your savings rate as your income grows. To achieve this, start by adjusting your savings allocation. Next is to set up an automatic transfer of a portion of your paycheck to your savings account. This way, you can spend the rest of your income without worrying about not saving enough. To maximize your savings, you can opt for a high-yield savings account like a Time Deposit and watch your money grow!
  3. Make a ‘Buy List’
    Resisting the urge to make impulsive purchases can be challenging, especially when the items are on sale and you have extra cash to spare. The simple solution is creating a “Buy List.”Jot down all the non-essential items (clothes, shoes, etc.) or big purchases (e.g. smartphone, car, etc.) you want to buy in a notebook or on your phone then leave it for a week or two. If you still feel the need to purchase it after some time, go ahead! This technique will help you avoid buying carelessly and free some cash that you can use to boost your savings fund.
  4. Avoid emotional spending
    Emotional spending, also known as stress spending or retail therapy, is when you turn to a shopping spree in response to stress or excitement. This type of spending can easily lead to impulsive purchases and contribute to a more expensive lifestyle.Eliminating triggers that prompt emotional spending is one way to avoid it. So start deleting all the shopping apps on your phone and unsubscribing from your favorite store’s newsletters. Next is to look for healthier, alternative ways to destress like daily meditation, journaling, or a bonding session with your family.
  5. Reward yourself wisely
    It’s okay to reward yourself occasionally but do so thoughtfully and within your budget. Indulging in too many luxuries can lead to lifestyle inflation and eventually cause financial stress, outweighing the benefits of treating yourself in the first place.

Being intentional with your spending is the key. So before making any purchases, ask yourself:

  • How will this purchase make you feel?
  • What emotions are you trying to avoid in buying it?

Increasing your income doesn’t mean you need to increase your spending habits. It will only cause your finances more harm than good. Instead, aim for balance: enjoy your hard work but be mindful not to overdo it. That way, you can keep the lifestyle creep from defeating you.

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