How Does Lifestyle Creep Affect Your Family’s Budget?

Lifestyle creep involves your spending increasing with your income, meaning you are saving the same or less as when you earned less. It might happen if you get a raise, take on a better paying job, or otherwise increase your annual income. It’s subtle, so you might not notice it happening. But lifestyle creep can easily make its way into your family’s life, affecting more than just your budget. Luckily, there are a few ways to evaluate your spending and prevent lifestyle creep.

Search for the Right Providers

Take some time to evaluate how much you are spending on providers for things like student loan debt. Shop around to see if you are getting the best rate. If you’re considering refinancing your student loan debt, you can use a marketplace to find personalized rates. You’ll save money on this expense and can then invest the difference.

Spend Time Thinking About Your Long-Term Goals

Another way to reduce lifestyle creep is by focusing on your long-term goals, not just how much you enjoy spending the money now. You may want to retire by a certain age, pay for your kid’s college, or buy a bigger home to hold a growing family. No matter your goals, this is an excellent time to sit down with the kids and talk about them together. This gets your kids involved with the family finances and instills an understanding of managing money.

They will also have a better understanding of why you are creating and sticking to a budget.

One way to help everyone focus on your long-term goals is by creating a board with a vision for the future. Naming goals like college education or a dream vacation allows you to create a budget that fits these things into it. Talk to your kids regularly about your values about money.

You may value wealth, security, or financial freedom. If lifestyle creep is starting to impact the way you live, you can refocus on these values. This can remind you about why you want to live below your means and keep everyone on the same page. It also gets the kids on board if you need to make cuts in spending, which can affect them.

Invest Extra Income

Every time you get more money from your side hustle, receive a bonus or raise, invest the difference. You can automate the process by setting up transfers into a different savings account. The amount hitting your primary checking and savings account will stay the same, reducing the temptation to spend more. Of course, that doesn’t mean you can never enjoy the money you are working for. If you and your family can now enjoy some things, you weren’t able to in the past, you should be able to. Maybe you couldn’t go on vacations before when you were living paycheck-to-paycheck, and a new job or promotion now allows you to do so. Just make sure you aren’t spending everything.

Conclusion

Lifestyle creep can be difficult to recognize and manage, but it doesn’t have to take over. With thoughtful planning and budgeting, you can prevent lifestyle creep from impacting your family’s financial wellbeing. Start by searching for the right providers, then spend time thinking about long-term goals as a family. Finally, invest any extra income you receive.