THE QUICK & DIRTY

Lifestyle Creep happens when your expenses increase in lockstep with your income. Analyze your financial goals to ensure that your spending aligns with your priorities.

KEY TAKEAWAYS

• Lifestyle creep, or lifestyle inflation, is the gradual increase in spending as your income rises, often leading to financial insecurity despite a high income.

• Even high-earners like doctors can fall victim to lifestyle creep, impacting their long-term wealth building.

• Building true wealth is not about how much you earn, but how much you save and invest consistently.

For the people in the back, we’ll say it again. If you’re a high-earner in your 30s and you get your financial sh*t together now, you will be a millionaire — a multi-millionaire, in fact. We spend all day every day building financial plans for high-earning young professionals and we’re typically uncovering between $4M-$9M in future wealth potential for them.

But the truth is, even rich people go broke and it's not always about bad investments or gambling debts. Enter "lifestyle creep," the financial villain lurking in the shadows, ready to snatch your cash faster than you can say "paycheck."

Doctors are the poster children for lifestyle creep. Their high incomes often lead to escalating spending habits, leaving them with surprisingly low net worths despite their earning power.

What is Lifestyle Creep?

Imagine this: You get a raise, and suddenly you're all about fancy dinners, designer labels, and vacations that scream "influencer." That's lifestyle creep, aka the silent killer of your savings. It's like slowly turning up the heat on a frog - you don't notice until it's too late and you're swimming in debt.

But not all victims of Lifestyle Creep have debt on the books, many are living paycheck to paycheck no matter how many raises they get.

Spot the Creep: Signs You're in Too Deep

Here are some signs you might be living a lifestyle you can’t afford.

• Credit Card Bills Are Your New Roommate: If you can't pay them off each month, you're in trouble.

• Savings Account is a Ghost Town: If your savings are nonexistent, you're spending way too much. Especially when you compare it to your income and cost of living.

• "Keeping Up with the Joneses" is Your Life Motto: Trying to match your friends' lavish lifestyles? Plot twist: they might be broke too.
  

Even the Joneses Are Faking It

Stalking their feed, you sometimes wonder, “how the hell do they have that kind of money?” From our experience, they don’t. Behind those perfect pics, the Joneses might be victims of lifestyle creep themselves. Or worse, their aspirational-looking lifestyle could be a house of cards built on credit.

Break Free from the Paycheck-to-Paycheck Trap

Living paycheck to paycheck isn't cool, especially when you're making decent money.  We promise you, The Joneses haven’t thought about tomorrow–they are living for today. And when tomorrow rolls around, they won’t be prepared. It’s up to you to decide if being prepared for the future is important to you. There’s no magic or shortcut. The key to being prepared for tomorrow is planning today.

We’re going to let you in on a secret—building true wealth is not so much about how much you make; it’s about how much you save. Don’t believe us? Check out this janitor who retired a multimillionaire.

What kind of lifestyle can I afford?

Warren Buffet said it best: "Don't save what's left after you spend, spend what's left after you save." Figure out your goals, then save for them first. Whatever is left in your checking account is yours to spend — that’s how much lifestyle you can afford. Aim to save at least 20% of your income. From that 80%, you have to figure out rent and everything else. If you’re still living paycheck to paycheck, you may not be able to hit the 20% guideline right away, but it’s something to work towards.

More tips to help you live a lifestyle you can afford

• Be mindful of your spending. Track your expenses for a week. You might be surprised where your hard-earned cash is disappearing.

• Pay yourself first. Okay, Robert Kiyosaki, we heard you and you’re not wrong. Automate your savings like a boss. Aim for at least 20% of your income.

• Got a raise? Congrats! What’s 20% of your new income? Your savings should grow with your paycheck.

• Get a Financial Advisor. If you're serious about your financial future, find a trustworthy financial advisor.

Lifestyle creep is a sneaky thief, but you can outsmart it.

If you stay mindful of your spending and prioritize your savings, you will build a financial future that's rock solid. Remember, true wealth is about having control over your money, not letting it control you.

Whether you’re saving up for Tahiti or a Tesla, we help you achieve your short-term and long-term financial goals.

Ready to make your money work harder for you?

Written by Priya Malani
Founder & CEO

Priya is an industry thought leader and personal finance expert for HENRYs [High Earners, Not Rich Yet]. Her relatable, no-bullshit style has garnered attention from the largest media outlets in the country including Forbes, The Wall Street Journal, Business Insider, NerdWallet, and more.