Avoiding Lifestyle Creep

[jennaf]

I've recently come across the Lifestyle Creep term, and I think most of us suffer from it to some degree. Of course, the more money we have (a raise, a bonus at the end of the year, an inheritance), the more inclined we become to spending money, which then contributes to our lifestyle cost creeping higher.

Have you tried to track and keep lifestyle creep under control? Which kinds of expenses have crept up the most for you? Have you tried to cut them back down?

I've personally felt how I'm slowly willing to pay more and more for rent (I'm currently looking to move). I tell myself that having a nicer room is well-worth, especially considering hybrid / remote work. Additionally, my monthly food expenses often cross 5万 or 6万 when including restaurants and drinking, which is way above the 3万 target I once told myself to adhere to...

 

[prabakaran]

@jennaf I have a slightly countervailing view--as long as your budget has some breathing room, it's ok to not invest every yen into your future. Life is short, live a little now while you're young; balance spending and saving however makes you the most happy!

 

[juanie123]

@prabakaran I agree with this. I used to never travel in order to save money. Now I travel with my family a few times a year, as budget allows. It’s a lot more expensive of course, but it’s been fantastic for happy memories and my mental health.

 

[girlwhoneedshealing]

@prabakaran Marie Kondo gets a lot of well-deserved dunking, but there's a lot to be said for the "does it spark joy" approach to your spending, perhaps even more so than your existing possessions.

I've gone to both extremes at points in my twenties before I figured things out. Total lifestyle creep to the point where I was in the red every month and eating into savings; and then being overly-frugal to the point where I was checking my savings and investments multiple times a week, and it took me a while to realise I was doing so to try and convince myself that the miserable lifestyle I had was worth it because the graphs kept going up.

There's a nice balance point which each person has to find. I've got solid investments and savings that I top up decently each year. Could I save more? Absolutely, but money does have a time value as well, and even allowing for the magic of compound interest, I'm not convinced having a bunch more cash in my seventies is worth missing out on experiences and things I enjoy in my forties (the caveat being that I'm already set up to be comfortable, if not wealthy, in my retirement, and if you're not on track for that already, that has to be your priority).

I've learned not to spend money on stuff that doesn't "spark joy" - filling my house with junk, basically - and instead to spend it on stuff that keeps sparking joy, preferably for years afterwards. My biggest discretionary expenditure is always travel, usually with friends or family, and honestly those memories, photos etc. can still give a little serotonin tickle even years later. I also don't deny myself a fancy coffee or cocktail if I feel like one (though if I had a daily Starbucks habit, I'd worry more about my waistline than my wallet); as long as the numbers balance by the end of the month, I don't worry how much money I'm spending as long as it's on things I genuinely enjoy and that genuinely improve my life, my relationships, etc. In the process of figuring that out, I also got a lot more relaxed about investing - I have some alerts set up of course, but generally I check in on my accounts every month or so, because I don't need to see the graphs going up to justify sacrifices I'm making in my life otherwise.

(Slight confession of privilege here though: I also enjoy my job a lot and if I won a giant lottery jackpot tomorrow, while I'd probably figure out an arrangement that gave me a lot less admin responsibilities etc., I'd still keep doing my core job anyway. I realise that makes the calculus very different from someone desperately trying to do the FIRE thing so they can escape a career they hate.)

 

[jennaf]

@prabakaran I've been thinking about that a lot as well. We should enjoy every step of our life, there's no point in saving for retirement if it makes us feel miserable for 40 years while saving!

 

[raindyjon]

@jennaf You could live the healthiest life and not even make it to retirement.

Besides climate change is going to shake things up over the next 30 years. Nobody should be expecting to retire.

 

[nicoleb07]

@jennaf The best thing for me has been learning who I am and what is important to me.

I have a nice (cheap) manshon I bought a few years back, we don't budget for food (just buy what we want). I hardly ever buy things other than books and coffee, and don't really drink alcohol.

Our spending is a fraction of our income, not because we are forcing ourselves not to spend, but because we don't want/need to.

*this took about fifteen years though, I used to spend every penny I earned and then some

 

[jaredprescottnz]

@nicoleb07 I lived in a company-provided apartment when I arrived. Had no real bills or commitments. So I divided my salary by 4 and spent it each month. Vacations went on the credit card.

What a genius...

 

[rogueebear]

@jennaf As long as you’re:

1) making all your saving goals:

• emergency fund
• long-distant future investment goals (I.e max out pension/s)
• short-term future investment goals (investment account…. At least bare minimum maxing out your NISA allowance).

And 2) paying all your commitments:

1) home loan/rent
2) bills/taxes
3) insurance (optional)

Then whatever money is left is fair game to be used on your lifestyle/travels/hobbies/random crap/or what ever you want…. It’s important to have balance in your life.

I know this is a finance sub, but money, although very important, is not everything.