How to Manage Lifestyle Creep (And Still Enjoy Your Money)

suburb with pools
Photo by Avi Waxman on Unsplash

I spoke about the insidious nature of social media “highlight reels” in a previous post here. Something related, but not as bad for your mental health, is “lifestyle creep”.

Instead, lifestyle creep is mostly detrimental to your financial health.

It’s the idea that as you earn more money, and your lifestyle improves, you begin to take what were once considered luxuries for granted and they become your new baseline. This is called hedonic adaptation.

Hedonic adaptation can be difficult to manage. On the one hand, the whole point of earning money is to spend it and improve your life, but oftentimes these changes in expectations are occurring subconsciously and over time can actually cause your quality of life to be lower if left unchecked.

According to this University of Michigan study, because we use money to improve our life, we have a tendency to use it for purchases that make us happy in the short term, but do nothing for our well-being in the long run.

An abundance of lifestyle creep will also delay your retirement.

Not only by reducing the amount of money you have available to save and invest, but by raising your standard of living to the point that you need more money once you retire to sustain the lifestyle that you now take for granted. This treadmill will not slow down by itself. It must be consciously checked with habits, introspection, and gratitude.

So how much lifestyle creep is okay and how much will crush your long term prospects?

According to a recent article by Nick Maggiulli of “Of Dollars and Data” that answer is generally 50% of your raises.

“Once you spend more than 50% of your future raises, then you start delaying your retirement.”

Nick Maggiulli, Author of “Of Dollars and Data”

Delaying your retirement while simultaneously noticing no difference in the quality of your life are pretty substantial reasons to keep an eye out for lifestyle creep. But another reason is it simply makes you softer.

We are a society of consumers and marketers. Every little inconvenience in life has an answer, if you’re willing to pay for it.

Don’t want to walk because it’s cold or inconvenient? Take an Uber (or a COVID friendly scooter). It’s only 8 dollars. (Do this once a weekend and you’ll spend $416 on Ubers in a year.)

Don’t want to make your own coffee? Stop at Starbucks. It’s only 7 dollars. (Do this three times a week and you’ll spend $1092 on coffee in a year.)

Don’t want to miss out on the next hit TV show? Subscribe to all the streaming services. It’s only 12 dollars. Each. (Subscribe to just three services and you’ll spend $432 on TV each year.)

You get the point. There are innumerable apps to outsource your daily chores. There is a new iPhone or Galaxy every year. Car dealerships will gladly pull your lease ahead (to get you in a new lease…).

car in the driveway

Khaled Allen posed it perfectly in his article, “You May Be Strong . . . But Are You Tough?“.

“One of the best ways to develop mental toughness is to accept small discomforts on a regular basis….These are usually small things,… but get in the habit of exercising will, to do something when it would be inconvenient or uncomfortable.”

Khaled Allen

Instead of finding reasons to buy something, I often find joy in the art of talking myself out of purchases. At a minimum, I make sure that the purchase is in line with my values or will help me achieve a meaningful goal.

The best uses of money are to increase your freedom (or productivity), improve your health (mental or physical), and improve other people’s lives (such as your kids, your closest relationships, and the disabled or disadvantaged among us).

Everything after that is just gravy. And gravy is mostly fat. Trim it.

Click below to read about the advantages of values-based spending:

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8 thoughts

  1. Delayed gratification is the name of the game. Love your blog, Kevin! Keep up the great work. You’ve inspired me to trim down some unnecessary purchases and subscriptions.

  2. At some point you might have told yourself that you can’t save now because you’re just starting your career, and you’ll save more when you make more. I know that thought has crossed my mind. As a whole, Americans aren’t good at saving for retirement. We put off saving today and, instead, defer it until tomorrow. But the cycle simply repeats again.

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