Flourish Financially Blog

Avoiding Lifestyle Creep: Do’s and Don’ts

Kathy Longo, CFP®, CAP®, CDFA® Thursday, 04 October 2018

Avoiding Lifestyle Creep: Do’s and Don’ts

Finally! You got the promotion! Time to celebrate with going out to dinner…and maybe the next night or more just because it’s no big deal now. And look, you hadn’t noticed before, but you can add your favorite entertainment package to your streaming tv account for only $40 more per month. It’s been a busy couple of months, you’d prefer not to spend your extra time on the lawn, maybe you can add a lawn service so that you don’t have to worry about it – for only $100 a month that seems worth it! And man, your car has seen a lot of miles…perhaps you should look into trading in/up for a newer car, you’ve got the room to afford more, right?

Maybe not. Before you know it, that raise you received has disappeared. But how?! Lifestyle creep.

“Lifestyle creep” occurs when we increase our spending as our income increases rather than choosing to save some of that additional income, and occurs for three reasons:

  1. People don’t have a plan for what they want to do with additional income
  2. People live too much for today, so they think of ways to spend “extra” money rather than planning for the future, or
  3. People spend far too much time comparing themselves to others

I can’t tell you how many people come to me and say, “Well shouldn’t we be able to do that? So-and-so said that they’re able to take this trip (or buy this fancy car) and they make less than we do.”

The comparison trap is dangerous. There are unknown circumstances going on behind the scenes financially for every individual and family. It’s impossible to tell whether your neighbors can actually afford whatever it is they’re buying. Perhaps they are thousands of dollars in debt. Maybe they’re about to start foreclosure proceedings. Maybe they inherited a large sum of money. The point is you never know what others can truly afford or why they can afford it.

Don’t let “lifestyle creep” sneak up on you and disrupt a comfortable financial future. Purchasing and acquiring things/experiences is a part of life; when done responsibly it can be a wonderful thing. Just remember to be deliberate and smart about your money and any increase you receive. Learn how to successfully manage your money by visiting, www.kathylongo.com.

About the Author

Kathy Longo, CFP®, CAP®, CDFA®

Kathy Longo, CFP®, CAP®, CDFA®

Kathy Longo brings over 25 years of expertise and experience to Flourish Wealth Management. Kathy is wholly dedicated to improving the life of each client and finds joy in making complex matters simple and easy to understand. She excels at asking the right questions, uncovering new possibilities and implementing the most advantageous strategies for success. Playing such a pivotal role in her clients’ lives remains an honor and a privilege. After earning a degree in Financial Planning and Counseling from Purdue University, she began her career at a small firm in Palatine, Illinois where she worked directly with clients while learning to build a viable, client-centric business. Over the years, she gained extensive knowledge and wisdom working as a wealth manager, financial planner, firm manager and business owner at notable, various sized companies in both Chicago and Minneapolis.

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