How to Avoid Lifestyle Creep

Maybe you just got a raise, or figured out a way to bring in more money each month through a side hustle. Congratulations! But as you earn more, it’s important to try to use the extra money sensibly.

Jargon Hack.

What is lifestyle creep?

Lifestyle Creep

The tendency to spend more as you earn more, particularly on non-essential items.

Find out

Strategies

• Stick to your budget, whether it’s the 50-30-20 rule or another way you prefer to keep track of your money, and allocate it to monthly expenses and savings.
• Consider using the extra monthly cash to build your emergency fund, for short-term and long-term savings goals. Short-term savings goals could include buying a car or a home, even going on a vacation. Long-term goals include saving for retirement.
• Don’t forget “fun” money. Consider setting up an account just for things you want to simply enjoy, whether that’s clothing, dinners out, or entertainment.
• Automate your savings. Each time your paycheck hits your checking account, have a percentage moved automatically to your savings accounts.

Consideration: Lifestyle creep isn’t always a bad thing. If you previously had to make a choice between buying groceries and paying your electric bill, and now you can afford to do both, that’s great! Lifestyle creep gets to be a problem when luxuries—such as always needing the latest and greatest new smartphone or handbag—become essentials.

Lifestyle creep quiz

1/4

Do You Have What it Takes to Avoid Lifestyle Creep?

 

What is lifestyle creep?

The tendency to get creeped out by the passing of time.

The tendency to build a budget that is too restrictive.

The tendency to always second-guess your spending choices.

The tendency to spend more as you earn more, particularly on non-essential items.

The tendency to spend more as you earn more, particularly on non-essential items. As you earn more, it’s important to try to save and invest more regularly.

2/4

Do You Have What it Takes to Avoid Lifestyle Creep?

 

What is the phrase for what’s leftover in your paycheck after state and federal taxes have been taken out, as well as deductions for Medicare and Social Security?

Net pay

Adjusted gross income

Total profit

Savings

Net pay. Your net pay is what’s leftover in your paycheck after state and federal taxes have been taken out, as well as deductions for Medicare and Social Security. Your net pay is what you should use when you’re budgeting.

3/4

Do You Have What it Takes to Avoid Lifestyle Creep?

 

True or False: A great way to avoid lifestyle creep is to stick to your budget.

True

False

True. If you get a raise or a change in income, you may want to adjust your budget to reflect that change. But the best way to stay on top of lifestyle creep is with a budget.

4/4

Do You Have What it Takes to Avoid Lifestyle Creep?

 

True or False: There’s no room for fun money in a budget.

True

False

False. You should include fun money for dining out, entertainment, etc. Your budget should include room for the things you like to do.

 

Do You Have What it Takes to Avoid Lifestyle Creep?

 

You scored 

Share this quiz with others!

Next Question