What is Lifestyle Creep and How Can You Combat it?

Paying off debt, advancing your career, helping your child move out of your home – these are common goals that many people aim for. Not only will these milestones free up or increase funds available to you, but they will also create a more stable financial future. However, access to more expendable cash will not fix all your financial issues. More cash can mean more problems, and one of those problems is lifestyle creep or lifestyle inflation.

What is Lifestyle Creep?

Lifestyle creep happens when one’s income increases, but spending also increases. For instance, if someone is able to pay off a car loan, freeing up $400-$500 on a monthly basis, they now have that extra cash to utilize. However, many people will spend that extra cash month after month, without strategically thinking about how they are using that money. Before they know it, they could be spending even more than the $400-$500 that they originally started out with.

Lifestyle creep can also occur when extra monthly income prompts someone to make purchases that were once considered luxuries. If the lifestyle persists, some find themselves no longer being able to put savings away, or even drive up more debt because they’ve put the extra expenditures on a credit card.

Indicators of Lifestyle Creep

Unsure if you’re experiencing lifestyle creep? Here are some common indicators:

  • Stagnant savings – has your savings remained about the same over the past few months? Are you consistently transferring money from your savings to your checking, and back again? If so, this could be a sign that you are spending too much on a monthly basis and need to re-evaluate.
  • Increased spending on social events – are you spending more when you go out? Or accepting more invitations to go out? This is also a common indicator of lifestyle creep, as these extra social events can add up quickly, wreaking havoc on your budget.
  • Feeling a lack of control over your budget – Are you avoiding looking at your bank account or budgeting tool? Overspending can often lead to avoidance, which allows you to continue the poor habits of overspending without addressing the consequences.

How Can You Combat Lifestyle Creep?

So, are you ready to fight lifestyle creep? Here are some ways you can take control over your finances.

  • Think about your long-term goals – To get in the habit of limiting your spending, think about your financial goals for the next 5-10 years. Are you contributing to a 401K? Do you have an emergency fund? Are you saving towards your dream vacation? By identifying your financial goals, you are more likely to actively save money and limit your spending.
  • Be careful about what you are putting on a credit card – while there are many good uses for a credit card, opting to take out more credit cards than necessary can ultimately hurt your financial future. Your credit score plays a big role in financial decisions down the road, which is why maintaining a good credit score now is so important.
  • Re-evaluate your budget – It’s time to break out your favorite budgeting app/tool and hit the ground running. Blackhawk Bank’s Budgeting Tool is a great way to keep your spending in check. You can create budgets, track and categorize your spending habits, see how much money you have to pay bills and other expenses, calculate your net worth and more.

Are You Ready for a Change?

Managing your financial future is a team effort, and our bankers are here to help you navigate ever-changing financial circumstances. If you are ready to take the next step towards your financial future, now is the perfect time to sit down with a banker and learn how we can help. Contact us today!


Meghan Moss

VP Retail Sales Manager

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