Money Saving

How to Avoid Lifestyle Creep While Still Enjoying Your Raise

In: saving money. Out: spending excessively.

Have you ever gotten a raise and wondered how the heck you so easily spent the difference? If you’re nodding your head furiously, you might be experiencing lifestyle creep. Hurry, run before it gets you!

What is Lifestyle Creep?

According to Investopedia, lifestyle creep is when your standard of living improves as your discretionary income rises and former luxuries become necessities. Like when your new promotion comes with a side of upgrading your YMCA membership to a boutique local studio. Next time, go with fries. They’re way cheaper.

Nobody is above lifestyle creep. It’s how lottery winners blow through their earnings within a few years and professional athletes end up bankrupt after years of cashing in on multi-million dollar contracts. The Notorious B.I.G. wasn’t kidding when he said “mo money, mo problems.”

Lifestyle Creep - woman holding credit card

Lifestyle creep is especially prevalent early on in your career, when you’re making more money than ever before (read: any money at all). To make splurging all the more tempting, you probably don’t have a ton of financial obligations to deal with yet either, like a mortgage or kids.

Another insidious contributor to lifestyle creep is social media. It’s basically a huge spotlight pointed at all of the fancy things our friends and peers have. If we have to see one more “that girl” video on TikTok…

Examples of Lifestyle Creep

Not sure if what you and your paycheck are going through is just inflation or full-on lifestyle creep? Here are some common examples of the condition.

  • You sign up for an extra subscription service or two, like HelloFresh or a new streaming site.
  • You’re now on first name basis with all your local delivery drivers because you get takeout so often.
  • You’ve signed up to receive updates from Apple every time a new iPhone comes out.
  • Instead of treating yourself to Starbucks once a week, it’s become a daily habit.
  • You moved into a luxury apartment building and doubled your rent bill every month alongside that impressive raise.

Lifestyle Creep - luxury apartment building

How to Avoid Lifestyle Creep in Your Twenties

As fun as it is to add luxuries into your life, it’s important to keep yourself in check so that you don’t set up camp on the hamster wheel of consumerism forever.

Lifestyle Creep - how to prevent lifestyle creep checklist

1. Crunch the numbers on that raise.

Let’s take a moment to celebrate your achievement in getting a raise. Be proud of your extra loot! Every raise, no matter how big, is going to help your financial situation.

But…that extra ten grand isn’t nearly as much as it sounds like once you factor in taxes. Yup, we did the whole “rain on your parade” thing. Sorry.

Before you go looking for ways to blow that extra income, figure out exactly how much each paycheck will change after taxes. Don’t get us wrong: the extra money will be wonderful. Just remember that Uncle Sam’s gotta make a living too!

Once you have a handle on exactly how much extra your new paycheck amounts to, you can make more informed decisions on where that money should go.

Lifestyle Creep - woman doing bills

2. Allow yourself extra spending money…and then save the rest.

Money is for saving and spending, so you should allow yourself some to splurge with. Maybe half of your newly acquired income will go towards a desired upgrade – like switching gyms, getting takeout more often, or finally signing up for HelloFresh.

Then, the rest of your newfound money can be allocated towards your saving and investing goals. After all, extra income doesn’t equate to a higher net worth unless you stash some of it away. Darn you, economics.

Lifestyle Creep - putting money in piggy bank

3. Adopt a values-based spending approach.

The problem with lifestyle creep is the temptation to upgrade every single thing – where we grocery shop, what gym we go to, what products we use, how we travel, where we live. So with no awareness of what we value most, it’s easy to spend extra in all categories.

Values-based spending is about identifying what brings you joy to spend your money on. Then, don’t spend excessively on anything that doesn’t.

Maybe you’re thrilled about spending extra on wellness via a monthly massage, but you couldn’t care less about fancy travel. On your next vacation, splurge on a glorious 90-minute massage, but stick to a budget-friendly hotel.

Lifestyle Creep - woman getting massage

For more insights and information on how to lean into values-based spending, read Ramit Sethi’s book, I Will Teach You To Be Rich.

4. Remember: it’s hard to go backwards.

Increasing your cost of living – and in some ways, your cost of happiness – is a slippery slope. Once you’ve lived in a luxury apartment building and slept on 1500 thread-count sheets, it’s hard to go back to an old walk-up and bedding from HomeGoods.

If you instead opt to spend beneath your means, you won’t even know what you’re missing out on. Plus, this outlook gives you more to look forward to in your future, and allows you to focus on the things that really matter.

By Jess Lohr

Jess is the co-founder of Adultescence, a podcast, blog and social media brand for twenty-somethings making the transition from life in college to adulthood. She writes about dating, friendship, money, and career. She also specializes in consumer insights, and is passionate about helping brands infuse the voice of their customers into their marketing, product, and CX strategies.

In her free time, you can find Jess spinning at The Handle Bar, obsessively consuming personal finance content, and playing with her adorable (but chaotic) puppy, Luca. You can follow her on Instagram @jesslohr or on LinkedIn.

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