5 best, proven ways to avoid lifestyle creep

Lifestyle creep, also known as lifestyle inflation,  is a situation where an individual increases their standard of living as their discretionary income rises and former luxuries become new necessities.

For example, an individual normally spends fifty thousand naira (#50,000) monthly when their salary is eighty thousand naira (#80,000). As luck would have it, they get a raise to one hundred and fifty thousand naira (#150,000), and they immediately increase their spending to one hundred thousand naira (#100,000) or more.

While there is nothing wrong with increasing one’s standard of living, but if an individual can still survive comfortably at a financial level and he suddenly begins to indulge in luxuries (getting extra pairs of shoes he never wears, always ordering food and eating out, using laundry man, paying cleaners, and other things) as necessities, that’s lifestyle creep.

There’s a fine line between lifestyle creep and improving your standard of living. According to a financial expert, “If you let lifestyle creep go unchecked, it can stop you from getting out of debt, going on that dream vacation, buying a home, saving for the future or reaching any of your personal goals in life.”

If you are looking for how to avoid lifestyle creep, here are 5 best, proven strategies recommended by many financial experts.

1. Increase your savings as your income increases

The moment your income increases, you should also increase your savings. If your income increases by 10%, you can also increase your savings by 3%, and then allocate the remaining 7% to improving your standard of living.

Like I said, there’s nothing wrong with improving your standard of living as long as you increase your savings.

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2. Review your budget and stick to it

It’s easy to lose sight of where your money is going when you get a raise as there are many things that will begin to draw your attention, including black tax. However, this is the right time to reassess your financial situation and start budgeting again. Not only that, you must stick to this new budget.

If you no longer track your purchases or account balances like you used to, this may be a sign of lifestyle creep.

3. Don’t stop negotiating prices of goods and services

Before, you used to negotiate the prices of goods and services you get from people. Now, you find yourself becoming nonchalant to the prices of goods and services you really want — ‘I have the money, why not?’ This is lifestyle creep.

Don’t stop negotiating the prices of goods and services just because you get a raise. If your barber still does his job well, stay with him. If you still get the optimal value from the services that people render to you, stay with that. This is not the time to think your phone is old even when it still serves you well.

4. Limit social life or events

That your income has increased doesn’t mean you need to start frequenting clubs, parties, buying Aso-ebi, or even travelling from here to here. Know how to prioritize social invitations.

5. Pay off debts as quickly as you can

Lifestyle creep may easily plunge you into debts. You’ll begin to notice that you’re suddenly piling up debt even while collecting a fat income— a testament that you’re overspending

To avoid lifestyle creep, monitor what you’re buying on credit, check your automatic purchases and subscriptions, and be mindful of discretionary purchases. This means you must consider what is important to you now, like right now, and what can be delayed till later in the future.