Lifestyle Inflation

Be wary of lifestyle inflation…

Lifestyle creep, also known as lifestyle inflation, happens when a person’s standard of living increases as their income rises. Instead of saving or investing extra earnings, they start spending more on non-essential items, like luxury goods, expensive dining, or upgraded housing. Over time, this can make it difficult to build wealth, even with a higher salary.

Signs of Lifestyle Creep:

• Upgrading to a more expensive car, phone, or apartment just because you can afford it.

• Dining out or traveling more frequently without adjusting your budget.

• Taking on higher recurring expenses (subscriptions, memberships, etc.).

• Feeling like things you once considered luxuries are now "necessities."

How to Avoid It:

• Save First: Set up automatic transfers to savings or investments before increasing spending.

• Budgeting: Track expenses and prioritize financial goals.

• Live Below Your Means: Increase spending intentionally, not impulsively.

• Mindful Upgrades: Upgrade when necessary, not just because of extra income.

Have you noticed lifestyle creep in your own life? Or are you thinking about ways to prevent it as your income grows?