Author: Tim Lemke / Source: Wise Bread
As time goes on, you may find that you are earning more money than you were previously. Congratulations! That’s a good thing. Unfortunately, new income often means new spending. You use higher paychecks to boost your standard of living with a bigger house, pricier cars, more costly meals, and luxury items.
This is called lifestyle creep.The problem with lifestyle creep is that things can crash down on you if your income drops. And it’s not particularly easy to dial back your cost of living quickly.
If you find that you are spending more than you have in the past, it may be time to evaluate whether you are the victim of lifestyle creep. Here are some tips on getting that “creep” headed in the other direction. (See also: 9 Signs You’re Suffering From Lifestyle Inflation)
1. Track your spending
Sometimes we just don’t realize how much we are spending. We spend unconsciously, assuming that we’re not doing anything different from what we’ve done in the past. We pay our credit card bills without reviewing them, barely glancing at the record of what we purchased in the previous month. This lack of attention can gradually lead to lifestyle creep.
If you begin a practice of tracking every dollar and reviewing that record on a regular basis, you’ll recognize where you’re making careless spending choices, and you can do something about it.
Reviewing credit card bills and bank statements is a good way to start. There are also online tools such as Mint.com and Personal Capital that allow you to aggregate accounts and see all your income and spending in one view.
2. Practice mindful spending
This goes hand-in-hand with tracking your spending. It’s important to be aware of how you are spending your money. Try to get in the habit of making purchases deliberately rather than impulsively. When you intend to buy an item, ask yourself questions like, “Do I really need this?” and, “Can I get this for a better price?” Do extensive research before buying any large items. In this day and age, there’s plenty of information available online about any product.
Mindful spending may even involve switching from credit cards to cash, so that when you buy something, you actually feel money going out of your hands. That sting alone can make you less likely to spend. (See also: How One Nice Thing Can Ruin Your Whole Budget)
3. Identify wants and needs
Lifestyle creep happens when you start spending money on things you want rather than things you truly can’t live without. You need food and shelter. You need school books for the kids. You don’t need cable television, designer clothes, or vacations in Bali. You don’t need Netflix, no matter how much you’ve convinced yourself that you do.
If you focus on spending money on things you need and ridding yourself of things you don’t, you’ll find your lifestyle creeping back down. (See also: How to Resist Lifestyle Creep and Still Have Everything You Want)
4. Seek value over luxury
Reducing lifestyle creep is not about bringing spending down to zero, or even purchasing the cheapest version of any item you buy. It’s about spending money in the most efficient way possible. When you seek to make purchases that are a good “value,” it means you are trying to find the perfect balance between quality and price.
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