The Lifestyle Inflation

The slippery slope of lifestyle creep and how to avoid it.

- By Santosh Pattanaik

As you progress in your career, get promoted, and change jobs, you'll likely make more money along the way. As you reach new milestones in life—marriage, family, a new home, a new car, and saving for college and retirement—you'll have more options for how to spend that money. In due course, do you find yourself relying on credit cards for regular expenses or having trouble saving money? If so, then lifestyle creep might be the elephant in the room. Lifestyle creep is fine within reason, but remember: it’s hard to throw it in reverse. It’s a surefire way to lose your financial perspective and footing.

Lifestyle creep, otherwise known as lifestyle inflation, refers to increased spending after receiving a raise or getting a higher-paying job. It happens when your standard of living rises alongside your discretionary income, and as soon as you can afford yesterday's luxuries, they become today's perceived necessities. It tends to be insidious and happens little by little, without you really realising it—it sneaks ("creeps") up on you. So, it can be difficult to realise it is occurring. This is why some experts have called it a "silent inflation."

It might have started with buying yourself the latest gadget when you scored a pay rise, and before you know it, you've upgraded your car. It's not just big expenses like an expensive car or a second home—it could be smaller things like paying for a gym membership you don't use; filling up your closet with so much stuff that it becomes overwhelming; buying things you don't really enjoy; buying video games you don't play or media you don't watch; sinking so much money into a hobby that it doesn't feel worth it anymore; eating out more often; or going from one streaming service to three. All these little extra expenses can start to add up.