How to Avoid Lifestyle Creep: 10 Tips For Keeping Finances in Check

Amelia Rose Talks.
by Amelia Rose Talks.

It’s important to learn how to avoid lifestyle creep. Lifestyle creep or lifestyle inflation is when you begin spending more money when your income grows. It’s a real risk to your finances when you let it get out of hand. I’ve been there.


When my income grew, I wanted a bigger house, better holidays, and more things. I wanted to be able to afford more but I believe there should be a balance, limits, and boundaries so you can stop your spending from growing excessively.


You could end up spending more than you’re earning and getting into debt. But I want my money to be working for me, and not all spent on luxury items. Here are 10 tips I used to avoid lifestyle creep.

1. Go through what you spend

You need to know your outgoing expenses. I sat down with pen and paper and wrote down everything I spent and every bill I paid. I transferred that total into a separate account that I call the bills account. All of my bills are paid out of that account.


I know that regardless of what else happens to my spending, the bills are taken care of. I have my investment accounts, my children’s accounts, my mortgage, and other accounts that I put money into, as well. All of those needs are taken into account and paid out before there is surplus money left over.


2. Set financial goals on an annual basis

You may think a year is too much. But there’s a huge benefit in setting yearly financial goals rather than setting them for shorter periods.


Setting a yearly goal allows you to work out what you’re going to need on a monthly basis to contribute towards that goal. It helps you have a realistic chance of reaching it in a year.


Write those goals down. When you write something down or tell it to someone you trust, it makes it real in your mind and makes you more accountable because someone is going to be eyeing your progress.


Once you know the percentage of what you need to have to reach your goal, set up an automatic transfer of that money into your fund’s account at the start of every month. That way it’s gone and not sitting in your account tempting you to spend.

Saving money in a piggy bank

3. See how much money is left

Once you have step 1 and step 2 complete, see how much money you have left to spend on frivolous items. How much of that money will you be happy to spend on handbags, eating out, going to the cinema, buying watches, or whatever it is that you’re interested in.


How much can you spend on luxury items while still looking yourself in the eye without feeling guilty or worried about what you’re spending? I have a guilt-free spending fund that I put money into. If I still have money left over that I’d feel guilty spending, I put it into savings or investments.


4. Set these amounts as your boundaries

Once you have these figures–the bills, the amount you need to put toward your yearly goal, yearly goal, the amount you’re happy spending on luxuries, and any extra amounts for savings and investments–then you write these figures down and set them as red lines in the sand.


These figures are non-negotiable that you must live and budget within. Otherwise, your money will get messy because bits of it will get eaten up. By making these figures non-negotiable, you will set boundaries to limit what you’re spending on your lifestyle.

Influencer on social media

5. Limit temptation

Temptation is everywhere. If you want to be serious about not overspending and serious about making your money work for you, learn to limit these temptations.


I unfollowed all of the social media accounts that showcased unrealistic lifestyles. If you’re consuming a lot of this content, you will try to keep up with these unattainable lifestyles and drive yourself nuts. I don’t want to watch things that make me feel bad about myself or make me feel less fortunate when I’m actually very blessed.


6. Make pretend you didn’t get an income bump

If you get more money per month, just pretend it didn’t happen! And when it does come in, transfer it out of your account right away and put it into a savings or investment account that you’re not spending from every day.


Just continue living on the same budget you had before your income bump.


7. Increase investments

Increase the amount you put into your pension, retirement, or other investments but make sure you get the right regulated financial advice on where to park money. Set up these extra contributions as automatic investments.

How to avoid lifestyle creep

8. Seriously analyze big purchases

If you are buying something with the extra money that you’ve always wanted, take your time to think it through. Analyze the hidden costs of buying something big, like a bigger house. Upscaling everything in your life can be dangerous and could make you feel more pressured and trapped.


9. Think realistically about how often you’ll use your purchase

If you’re thinking about a big luxury purchase, like a car, van, or boat, think realistically about how much you will use this type of depreciating asset in a year. If the answer is “often,” it may be a worthwhile purchase. Maybe renting a luxury item makes more sense rather than owning one.


10. Don’t use credit cards

Don't fall into the trap of luxury spending on credit cards. You’ll lose track of what you spent and what you are paying for it. Your balances will carry over monthly, they’ll never clear, and you’ll end up owing a lot of interest.


How to avoid lifestyle creep

I put these 10 tips into practice when I started making more income. I hope they’ve given you insight into how to avoid lifestyle creep. Let me know if you think these tips can help. Do you have other tips to share about dealing with the effects of lifestyle creep?

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