Episode 324 – If your income goes up over time, it doesn’t necessarily mean that you’ll be able to save more. If you’re not careful, “lifestyle creep” can make things worse. Here are a few ideas on how to fight back against lifestyle creep.

Hello this is Bill Rainaldi, with another edition of Security Mutual’s SML Planning Minute. In today’s episode, careless spending can erode income gains.

It may be counterintuitive, but sometimes doing better financially can do more harm than good to your savings. This is due to a phenomenon known as lifestyle creep. Lifestyle creep, sometimes referred to as “lifestyle inflation,” occurs when your spending increases as your income rises, turning yesterday’s luxuries into today’s necessities. Without realizing it, this slow increase in expenses can make it difficult to save money and reach your financial goals.

Increases in online shopping, subscription services and food delivery can all be indicators of lifestyle creep.[1] The result is that, in spite of your improved income, you begin saving and investing less and less. What can you do if you see this happening to you?

Here are a few ways to resist the impulse spending that comes with lifestyle creep:

If your income goes up over time, it doesn’t necessarily mean that you’ll have more money in your savings or checking accounts. Very often it does, but if you’re not careful, lifestyle creep can kill any progress towards your financial goals or even make things worse. The best way to deal with this is up to you, but careful planning and simply thinking through your spending is a good start.

This doesn’t mean that you’re never going to splurge. There’s no need to get too worried about small, infrequent, indulgences.[7] Focus on the bigger picture.

[1] Tam, Ruth and Aslam, Michelle. “If your spending is eating your savings, you might be experiencing ‘lifestyle creep’.“ NPR.org. https://www.npr.org/2022/07/13/1111300716/lifestyle-creep-definition (accessed March 10, 2025).

[2]  Id.

[3] Id.

[4]  Id.

[5] Id.

[6] Gould, Wendy. “The Seductive Trap of the Lifestyle Creep.” Verywellmind.com. https://www.verywellmind.com/lifestyle-creep-8667848 (accessed March 14, 2025).

[7] Tam, Ruth and Aslam, Michelle. “If your spending is eating your savings, you might be experiencing ‘lifestyle creep’.“ NPR.org. https://www.npr.org/2022/07/13/1111300716/lifestyle-creep-definition (accessed March 10, 2025).

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