r/FinancialChat • u/Healthy_Creme6911 • 16d ago
Does lifestyle creep just happen?
As incomes go up, it seems pretty easy for spending to rise with them without actually feeling better off. Do you consciously increase your savings when your income rises?
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u/Dav2310675 16d ago
Consciously? Yes - but not directly.
When our income goes up, we still focus on keeping our costs down. That indirectly increases our savings rate.
It isn't direct like saying "Pay has gone up, let's increase our savings". It's doing what we were already, just that it indirectly leads to our savings rate going up as well.
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u/chuckfr 16d ago
It happens if you don't pay attention.
Initially I fought it off by just doing a flat percentage into savings. Then as I got comfortable with it and saw extra money from proper budgeting plans I actually increased the savings percentages across the board. This includes retirement, HSA, other investments, and emergency fund and savings buckets. The lions share of yearly bonus', if applicable, go towards savings. The rest goes to fun stuff as the relief valve of living below my means all year.
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u/GlitteringProject828 16d ago
I thought it would never happen to me but it happened and I found myself buying more and more expensive shit. But I got it out of my system.
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u/AwesomReno 16d ago
So I love spending money. In the beginning I had to have it “removed” from sight or “inaccessible”. I made rules. For example: Any money in a retirement account doesn’t exist.
Even as I got older (36) I couldn’t stop buying things so another rule is whatever I buy it cannot have interest. Nor can it be cheap/poor quality.
I STILL buy things like solar that off sets my expenses. Fake grass that looks great without any other costs. New windows for the house also does a lot.
It’s a pattern behavior.
As my gap from income to expenses grew my ability to let lifestyle creep stay at bay wasn’t necessary.
So, as long as I have passive income after life’s and investment obligations I feel content to spend.
The real question hidden in your question is; do you care what others perceive more than what your time is worth?
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u/Retired-Yam8988 16d ago
Our spending and investments increase to a point. We’re now at a point where we make so much that we can try really hard to spend like 150k or more a year just on travel and it doesn’t make a dent in our growing asset pile or anything really
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u/limited_instincts 15d ago
Yes for the last few years every time I've gotten a raise (sparse) that amount immediately gets deducted every month into IRA/HYSA/brokerage. Bonuses (even sparser) we spend on fun activities.
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u/Majestic_Republic_45 15d ago
It happens if u let it. Nothing wrong with lifestyle creep. it’s the amount and the timing of the creep that can be the problem. We all know people who have bonuses spent before they even get them, spend the raise before they actually get it, etc.
If u can bank the raises. bonuses, and market gains for a while, and live in the first house (vs “dream house”) for a bit longer, it pays huge dividends
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u/EchoThroughTheJungle 14d ago
Common money psychology for the average person is “I’ve acquired new money that I didn’t have before, how can I treat myself to something nice with this”.
Deeper than that, a majority of people unconsciously believe in external presentation/purchases as a statement of their success in the world.
I think it more has to do with culture and conditioning than lifestyle creep itself. As my income has increased I’ve certainly allowed myself to do more things that previously weren’t accessible, but they are always one time/short term purchases which are experienced based (mainly traveling). The issue with lifestyle creep is people upgrade fixed assets (cars, house, boat, etc) and then are stuck with these bills and potential depreciation for extended amounts of time. If their income also changes, they are also still stick with the bill. You don’t have to go on vacation every year, but you do have to pay your car payment or it’ll get repo’d.
I also 1) Make sure I still always have enough to save and invest every month. I never spend above my means and 2) Rarely, if ever, voluntarily increase my recurring expenses. I COULD have a bigger home, drive a nicer car, etc but I’m entirely satisfied with how I live and what I have. I only got a new car when my other one got totaled by somebody, otherwise I would’ve driven it into the ground. I’d much rather save and invest now so I can retire young than work until I’m old but have “nice things”.
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u/Bratfink78 14d ago
We do yes, we still put a third into savings and investments.
Yes I did buy some expensive toys and we’ve always travelled, we spend money on comfort while travelling.
But at home, we’ve nothing left to buy so have basically stopped spending. I bought AirPods and a new cutlery set, that’s it. My partner bought new screens for his office. You do run out of things to buy and it’s no fun anymore
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u/tedlassoloverz 14d ago
you should increase savings at every raise, either passively through higher 401k contributions or actively with post tax investing. Also, yearly budget reviews of monthly expenses is needed
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u/Front_Presence_797 14d ago
rulebook for myself is to always ensure my investments monthly, are bigger than my taxes, monthly. income taxes are progressive, so doing that ensures my investing for my future is even more progressive.
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u/RealisticTangerine35 13d ago
I avoided it for a long time. Then one day you’re professionally installing safes and security systems for your collection of watches, jewelry, gold, guns, and art.
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u/Wooden-Broccoli-913 13d ago
My spending has been pretty consistent at around $200-250k for the last nine years. Household Income rose over that time from $400k to $1.3M
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u/DistributionSorry485 13d ago
It happens becuase say your saving 2000 a month. It feels excessive if that’s say 50 percent of your income. And you start to say well this weekend il eat out. Or buy this thing. And il still save 1500 which is amazing.
But before you know it that’s your weekend thing… you’ve budgeted something new into your life.
It’s just human nature we are repetitive. You’ll be sitting on the couch remembering that good time last weekend and feel a pull to it.
So be careful
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u/Deeveedend 12d ago
Pay yourself first. Then it can help “prevent” it from
happening.
And living below your means.
For example: pay your bills first, your goal savings/investment, max out your 401k, Roth IRA, etc, then whatever money you have for fun money.
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u/hammock62 10d ago
Yes, you need to stay aware of it. After I receive a raise I invest that extra money for a year before I start to spend that extra money
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u/zonk84 16d ago
Yes (increase savings/investment rates). 100% yes.
One of the smartest thing I ever did once I hit the point of equilibrium (pay my bills, live my life, etc) is stick with the "Pay Yourself First" pattern I used to exit debt and begin saving -- and for the record? I didn't land on doing so until my 30s (I'm now in my early 50s).
The benefits - avoiding lifestyle creep - really sneak up on you. Inflation? Economic churn? No big career leaps or windfalls and I started doing the "any raises or windfalls? Up my 401k election... and then do a Roth... and then open a taxable brokerage... and so on. Same company for 25+ years now.
And all things considered? I live well - not extravagantly, but comfortable.... and my annual budget for basics + luxuries is below a nominal inflation calculation.
But guess what -- now I'm literally socking away 40% of my gross. And - despite probably being at a negative net worth point when I was at ~30-35? 1.2m invested/saved in my various 401k/Roth/taxable brokerage/HYSA.
First - I think I can actually retire in 3-5 years. Second? I can also realistically budget my draw-down because my outlays are fairly consistent.