We’ve all heard that after graduating college and starting working at a “real job,” we should try to continue living like broke college kids. Even when we get a salary raise, we shouldn’t buy a shiny new car or go on a shopping spree. These large changes in spending are often called lifestyle inflation, and they keep us from paying off our student loans or pursuing other financial goals.
But what if you didn’t do any of those things? What if you think you're following all the rules, and yet still find yourself spending slightly more money each month? This slow but slippery slope is known as lifestyle creep, and it’s a bigger problem than you may think. Sure, it may seem like no big deal — just $3 here and $5 there. But even those small amounts can add up and damage your finances.
My Lifestyle Creep
When I first started budgeting and tracking my spending a few years ago, I could easily see where my expenses varied from month to month. But since then, I’ve stopped watching where every penny of my money is going. This is partly because I earn more now than I did then. But truth be told, I’ve also gotten a bit lazy.
I didn't even realize that I’d succumbed to lifestyle creep until I compared my last month’s budget spreadsheet to one from two years ago.
I guess keeping all those old spreadsheets has come in handy. Thanks to them, I can see that these small amounts of lifestyle creep have resulted in me spending over a hundred dollars more each month.
Some of my budget categories that were affected by lifestyle creep were things that are supposed to be the same every month, like my cell phone and internet bills. Somehow these expenses increased, even though I haven’t changed plans or services. But I’ve also noticed that my spending on groceries and entertainment has creeped up over time, too.
I spend more money on grocery items, and yet I can’t recall what I buy now that I didn’t buy two years ago. Perhaps this spending creep is due to outside influences, like macro inflation and increasing food prices. But still, I decided I had to crack down on my grocery spending.
The biggest creep in spending, though, has been for entertainment and eating out. Because I needed every penny of my income to make ends meet two years ago, I could barely afford to budget any money for entertainment and dining out. But as my income increased and I started building my freelance writing business, I justified some of these expenses. I told myself that “I deserved it” or I “didn’t have time” to cook and should just order take out instead.
So what’s a girl to do to reverse this lifestyle creep?
How to Stop Lifestyle Creep
The first thing I did was to call my cell phone and internet companies to ask why my bills have been increasing. While they didn’t clearly explain this to me, I was able to negotiate a lower rate on both of my monthly bills. These two phone calls will save me a few hundred dollars each year compared to what I’m paying now.
I’ve also decided to change back to a cash budget for groceries and entertainment spending. Using cash helped me stay on budget for these variable expenses when I first started out. But since then, I stopped using cash and started using my debit card for its convenience. But maybe it was too convenient at times, leading me to overspend by a few dollars each month.
The Bottom Line
Large increases in your budget due to lifestyle inflation are easy to spot. But recognizing lifestyle creep is more difficult. This is just another reason why tracking your spending is so important for your financial health. If you’ve kept records of your spending over time, you’ll be able to easily see where you’re leaking money so that you can make changes and reverse your lifestyle creep.