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Lifestyle Creep: How to Prevent It From Sabotaging Your Financial Future

We’ve all been guilty of wanting “better”—that second home nestled in the mountains we’ve been dreaming of, the new premium car we’ve been eyeing, or the latest trendy tech gadget that everyone’s been talking about.

And we’ve all had the thought, “If I can afford it, why not? Why not treat myself?”

Here’s when it becomes an issue: what used to feel like a treat—luxury vacations or splurging on high-end purchases—slowly becomes your new normal. As your income grows, your spending quietly grows right along with it (and never really goes back down). And, unfortunately, this pattern of lifestyle creep can sneakily derail your financial goals over time.

When your expenses rise to match your income, it can leave less room for maximizing your savings potential and building generational wealth. And while you might feel comfortable in the moment, excessive spending can slowly erode your ability to reach your long-term goals and objectives. 

How Lifestyle Creep Manifests

Lifestyle creep doesn’t just impact your wallet—it can reshape your mindset and priorities, making financial growth harder to achieve. It can happen subtly without you even consciously realizing it. And it’s not about the occasional splurge, but how those splurges become everyday expenses. 

As your earnings rise, it can feel natural to elevate your standard of living, but this can become a problem when your increased spending leaves little room for saving, investing, or securing your financial future for yourself and your loved ones. 

Lifestyle creep isn’t something that happens overnight; it’s a gradual shift. Maybe it starts with small upgrades, like dining at exclusive restaurants, upgrading your car to a luxury model, or shifting to more expensive brands. 

Over time, these small changes become your new baseline, and you may find that it’s not just your spending that’s increased but your expectations, too. This can create a cycle where you feel like you’re always keeping up with your current standard of living, instead of moving towards your future goals.

The Hidden Risks of Lifestyle Creep

On the surface, spending more as you earn more doesn’t seem like a big deal, right? You’re in a strong financial position and you can easily manage it. But lifestyle creep can slowly eat away at your ability to save, invest, and accumulate your wealth.

Extra income that could be channeled into high-return investments or a tax-advantaged retirement account might instead be spent on your new normal, resulting in missed opportunities for growing your wealth. The cumulative effect of lifestyle creep can reduce your financial flexibility and limit your options when it comes to financial planning for the future.

Maintaining an ultra-high standard of living can also take an emotional and psychological toll on you. Once you’ve adjusted to certain luxuries, scaling back can almost feel impossible. This creates added pressure to sustain your current lifestyle, even if it’s at odds with your priorities. 

The feeling that you have to “keep up with the Joneses” and maintain a certain lifestyle image in your social circle can cause stress and dissatisfaction in your everyday life. It can also lead to you making financial decisions that prioritize short-term gratification over long-term success. 

Budgeting Strategies to Combat Lifestyle Creep

Countering lifestyle creep starts with intentional planning and smart financial habits. By implementing practical budgeting strategies tailored to your income and goals, you can enjoy the rewards of your success without compromising your long-term financial security.

1. Set Non-Negotiable Savings Goals

The best way to stop lifestyle creep in its tracks? Pay yourself first. Before any discretionary spending, make sure you’re putting money towards savings, investments, and retirement. You can set clear, non-negotiable goals like contributing to your retirement accounts, building a trust, or expanding your investment portfolio. This helps ensure that your financial priorities are met before lifestyle upgrades even factor into your finances.

2. Customize Your Budget

The traditional 50/30/20 budgeting rule (50% needs, 30% wants, 20% savings) can be customized to reflect your income and goals (consider dedicating a larger percentage of your income to savings and investments). Tailoring a budget to your individual circumstances can help your money work for you in the most effective way possible.

3. Incorporate Budget and Lifestyle Checkpoints

Conduct regular checkpoints to assess your spending habits. Take the time every few months to review your budget and ask yourself, “Am I spending on things that truly matter to me, and align with my goals?” By staying mindful of where your money is going, you can keep better track of your spending.

4. Reframe Your Spending Priorities

Align your spending with your values, so you can distinguish between meaningful expenses and unnecessary indulgences, and live a more fulfilling lifestyle. Take a moment to think about what matters most to you—it may be spending quality time with your family, prioritizing your health and wellness, or supporting causes you care about through charitable giving.

5. Invest in Experiences, Not Things

Shifting your spending towards experiences rather than material things can help you find more joy and fulfillment in your wealth. Focus on travel, hobbies, or adventures with your loved ones; you’ll not only create cherished memories but also approach spending with more intention.

6. Practice Conscious Spending

Conscious spending is about being deliberate with your money, focusing on quality over quantity, and cutting back on areas that don’t add value to your life. By being conscious of your spending, you can find a balance between enjoying your wealth and supporting your financial goals, and ensure that every dollar you spend contributes to a richer and more meaningful life.

Stay in Control and Focus on What Matters

Lifestyle creep can do just what it says—creep up on you without you realizing it. It can feel like you’re just enjoying the rewards of your hard work and success, but excessive spending can move you away from your bigger goals over time. However, with awareness and strategic planning, you can keep lifestyle creep in check and stay in control of your financial future.

A financial advisor can help you develop a strategy to prevent lifestyle creep and preserve and protect your wealth. At Legacy Planning, we’ll work with you to build a financial plan that aligns with your priorities and values, to help you reach your long-term goals. With our personalized guidance, you can confidently navigate challenges like lifestyle creep and keep your focus on what truly matters to you. 

To see if we can help you plan for a secure and fulfilling financial future, click here to schedule a conversation today.


Content in this material is for general information only and is not intended to provide specific advice or recommendations for any individual. Legacy Planning does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.

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