Lifestyle Creep: What It Is and How to Avoid It
If you are like me, then the first job you graduated from high school or college will not be completely favorable. Like many people, I have entered the labor force, and the income is much lower than the average salary.
The good news is that with the passage of time, most of us see that our salary has gradually increased, which can open a brand new opportunity world.
Unfortunately, it usually feels that the increase in these wages disappears as fast as it appears. We tried to save money and want to know where all these extra money went.
The Answer? Lifestyle creep.
Although lifestyle creeping can seriously reduce your salary increase, there is good news. There are several ways to avoid it, if you are already your problem, you can even revoke it.
What is lifestyle creep?
lifestyle creep (also known as lifestyle inflation) is the gradual increase in your free control expenditure with the increase of income.
Some lifestyle inflation is intentional. As we have more income, we also choose to improve living standards. However, many lifestyles will happen without we realize. We just have extra money in the bank account, so we spent it.
Although it is natural to increase the lifestyle with income, it will also severely damage your financial goals. When you increase your lifestyle with the number of wages, you will not allocate additional funds to emergency funds, retirement accounts and other financial goals.
Lifestyle creep examples
Lifetime creeping can appear in many different forms. In some cases, lifestyle inflation is due to many increased costs. For example, you may register a new streaming service here and there, splurge or switch to organic grocery.
It is the slight increase in the expenditures of these categories that make the lifestyle creep not noticeable until you look closely at the budget.
In other cases, the inflation of lifestyles is more likely to find because it appears in a large -scale purchase. You can improve your lifestyle by upgrading houses or apartments, buying new cars or making luxury vacations.
How to avoid lifestyle creep
Lifetime inflation is usually not even realized, but there are several ways to help avoid this. Continue reading to learn five ways to avoid lifestyle creep.
CREATE A BUDGET
It is almost certain that the best way to control expenditure is to have budgets, but it is worth repeating.
When you have a budget, you will tell yourself where you go, instead of simply spend the money in your account.
The 50/30/20 budget is one of the best budgets to solve the creep of lifestyle. Using this budget method, 50 % of your income is used for demand, 30 % for demand, and 20 % of the income for savings and debt.
This budget method can easily solve the increase of salary, because no matter how much you make, you use the same percentage to allocate the budget. When income rises, you can simply use the same framework to divide it.
SET FINANCIAL GOALS
The target setting needs to make a clear plan for your money. For example, if I want to provide prepaid for the house within two years, and this will spend me $ 24,000, then I know I need to save about $ 1,000 for the goal.
If I am glad to be a homeowner, and this goal is really important for me, then I won’t want to spend $ 1,000 for unnecessary expenditure. No, I already have the plan to have this money.
I know that one of myself is that when I have a specific goal instead of saving for saving, I will be more motivated to save.
CREATE BOUNDARIES AROUND DEBT
The most dangerous situation of lifestyle crawling is that when we actually did not get enough income to pay it, unfortunately, this is a case of many people.
In some cases, it is difficult to avoid debt. If you have a financial emergency and you do not have cash to pay, it may be necessary to use credit cards or loans to raise funds. For large -scale purchases like cars, financing is the only choice for some people.
But usually, credit card debt is the result of the leading inflation of lifestyles. I say this from experience! When I divorced at the age of 27, I could no longer bear my own lifestyle, and finally added some credit card debt before I took the finances seriously.
AUTOMATE SAVINGS
When income rises, one of the reasons that are easy to increase expenditure is that we only have more money in the bank account. When money is there, it is easy to spend.
A good way to avoid this problem is automatically saving.
When I was ready to save it carefully, the day after I got the payment every month, I will automatically transfer the check account to the savings account. At first, it was only $ 50, but as time passed, I gradually increased it.
MAKE A PLAN FOR WAGE INCREASES
When your past salary increased, did you sit down and deliberately decide where the money will go? Most people do not, but this is actually the best way to avoid the spread of lifestyle creep.
Suppose you just discovered that you will get a salary of $ 3,000 (after tax). When you decompose it every month, the extra $ 250 does not seem to be much. However, when you look at the overall situation, $ 3,000 is good money that can fulfill your savings and other financial goals.
Therefore, when you raise your salary, you will not only increase the expenditure by $ 250, but also sit down in advance to determine the whereabouts of $ 250. Maybe you will put it into practice, pay it to the student loan, the down payment of the house or your investment.
Can you reverse lifestyle inflation?
Unfortunately, most of us have become victims of the entire adult lifestyle. Therefore, although it is important to talk about how to avoid the use of every salary increase to expand our lifestyle, we are equally important that we talk about remedial measures for existing lifestyles creep.
Can you actually reverse lifestyle inflation?
I won’t lie -it is difficult to reverse lifestyle inflation. After upgrading your habits, eating habits or wardrobes, it is difficult to return to a more affordable version you used to have. But this does not mean that it is impossible to reverse the lifestyle creep.
In my opinion, the key to eliminating some lifestyle inflation that has been paid in the budget is to know your values. Because when you know your values very well, it is easier to spend the same way as them.
Final Thoughts
Lifetime creep seems to be harmless, but it may be derailed severely, and it will even cause you to pay your salary to salary.
The good news is that as long as you intend to do this, you can improve your lifestyle, and at the same time, you still have room for savings in the budget to invest and take care of your future.
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