Over time, your increased income changes your spending habits. Slowly but surely, your monthly expenses increase in number and price. Upgrade your essentials, from your smartphone to your car to your apartment. Enjoy more luxuries like dining at upscale restaurants and shopping at designer boutiques. Your lifestyle is more extravagant because you can afford it.
But can you really afford it?
Read on to find out how lifestyle change is a serious financial problem and what you can do to avoid it as your income increases.
What’s wrong with the Creep lifestyle?
The insidious nature of lifestyle change is that it can make you financially vulnerable, even when you’re making more money than ever before.
The allure of a more exclusive lifestyle may encourage you to neglect practical habits that can protect your financial stability. You may not pay your outstanding debts; In any case, your debts may grow with your lifestyle change. You may not keep the money in a savings account. You may not be ready to handle the financial hurdles that come your way.
What if you are hit with an emergency expense? Will you have enough savings available to pay for it? If you live a slow lifestyle, your answer might be a surprising “no.”
A single emergency expense could send you into a panic. How will you pay for it? You can use alternative payment methods to cover the expense in a short period of time. In that case, you could use a credit card, as long as the balance is well below the credit limit. You can also look for a loan option online like flexible loans. Find out what flexible loans are and how they can help you in this type of emergency. You may be eligible to apply for one when something goes wrong.
The strange thing is that you could have followed these practical financial habits when your income is lower. This is because you did not assume that you could afford any type of expense. You knew you had to be careful with your money.
An increase in income should add more financial stability to your life, not less. You can achieve that stability, as long as you avoid falling into the lifestyle trap.
5 Ways You Can Prevent Slippage And Save More
You can handle anything as long as you have a plan. Follow these steps to manage your money more intentionally and avoid lifestyle change.
1. Learn about the Creep lifestyle
Awareness is key! The first step in avoiding lifestyle change is learning what it is. Now that you know about this financial phenomenon, it will be much easier for you to recognize it in your own life. You can see that you are practicing unsustainable spending habits and setting yourself up for trouble down the road.
2. Make a budget
The best way to keep your spending under control is to make a personal budget. A personal budget will show you how much you come in each month and how it compares to your essential and non-essential expenses. Your budget guidelines should give you a clear idea of what you can reasonably spend.
How can you start a budget? The easiest way is to download one of the best budget apps on your smartphone or computer and then follow the instructions.
3. Use credit responsibly
Do you swipe your credit card and withdraw from your line of credit without thinking about how you’ll make payments later? Are you still borrowing to maintain your lifestyle? You should stop this. You will end up borrowing too much and creating outstanding balances that you will not be able to repay in a reasonable time or manner. You could even max out your accounts.
Use your credit more responsibly. Only charge your credit card when you’re sure you can pay the balance on your next bill. This will prevent you from paying interest later. When it comes to lines of credit, you should only use them for emergencies, not everyday expenses. Leave them alone until you need help with unexpected household repairs or medical expenses.
4. Separate savings
You don’t want to make yourself vulnerable to financial emergencies. So set aside savings in an emergency fund. An emergency fund is a safety net that can catch you when something goes wrong.
How much should you set aside? A general rule of thumb is to save three to six months of living expenses in your emergency fund. With this size, you can use the savings to cover urgent unplanned costs without having to rely on a credit card, line of credit or flexible loan.
These short-term savings can also help you handle some of life’s biggest emergencies. If you’re laid off, get sick, or have to care for a sick family member, you’ll have enough savings to cover six months’ expenses and stay afloat.
5. Splurge on purpose
You don’t have to live on a shoestring budget once you start making more money. While the idea of saving all your extra money is noble, it’s just not realistic. You will tire of the intense restriction and eventually spend beyond your means.
It’s much smarter to leave room in your personal budget for splurges. This way, you’ll know you’re not spending too much when you decide to buy something more expensive. Giving yourself permission to indulge should prevent you from going against your budget and splurging impulsively. Instead, you will splurge with intent.
The Bottom Line on the Creep Lifestyle
Wanting to improve your lifestyle every time you earn more money is completely justified. But spending all your extra earnings without setting up any safety nets is not a good idea.
Keep today’s tips in mind every time you increase your paycheck. They will help you enjoy your new income and maintain your financial stability at the same time.
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