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Money Motivation

How To Fight Lifestyle Creep & Why It’s Dangerous

Lifestyle creep, also known as lifestyle inflation, is something that can happen before you even realize it. As your income increases so does your lifestyle.

Why is lifestyle creep dangerous?

When you receive the good news that you are getting a raise or a new job with a higher salary that means you are going to hit your financial goals faster, right? Not necessarily, in fact in most cases not. Your goals may even slow down! 

For most people, as they receive news that they got a raise their mind instantly goes to all the places they can now spend the money. 

First, we need to go out to a fancy restaurant to celebrate. Then we can finally “afford” to upgrade the car… which will lead to a higher car payment. It is so easy to fall into the trap of lifestyle creep and end up spending your entire raise and sometimes even more!

How to stop lifestyle creep?

As soon as you know how much your increased salary will be, it’s time to sit down and figure out where to allocate that money. 

If you aren’t already on a written budget, it’s time to get on one! Here is my easy-to-use budget template with pre-populated formulas so get you started! 

Open up your budget and come up with a game plan for the additional money you will be receiving each month. Whether your increased salary will be $100 extra a month or $20,000 extra a month, you need a specific plan for the money.

"As your income goes up… so do your goals … NOT your spending"

What are your current financial goals? Are you paying off debt, saving, or investing? Allocate your extra money to these goals and stick to your plan. 

It’s so easy to increase your spending when you’ve received a raise but it’s important to make your financial goals top priority. Yes, it may not be as fun to make that bigger debt payment but think of how amazing it will feel once you are debt-free and then all the money you receive is yours to keep!

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Be mindful of your friends

Another reason why lifestyle creep can be dangerous is our friends and the people that we hang around. Don’t fall into peer pressure. 

If all of your colleagues upgrade their car when they make partner, don’t feel like you need to as well. 

At the end of the day, you and your family have your own goals and they can make fun of you all day long. You are the one that will be so much happier with no car payments and maybe even a paid-off house!

Don’t stop there! Keep growing your income.

Just because you received a raise at work doesn’t mean that’s all the money you can make. Have you thought of picking up an online side hustle?


Struggling to find the right side hustle?

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I'm no longer struggling to pay bills.

Have you ever received a raise so that you are no longer struggling to pay bills but then find yourself no longer making progress on your goals? 

Unfortunately, it is so easy to stop tracking your spending or working your side hustle because you no longer “need” to. But this is a huge trap because it can result in making zero progress on your financial goals or even going backward because you get too comfortable and start creeping t going into the red at the end of the month. 

Don’t let this happen to you! 

More Ways To Save:

Here at Freedom In A Budget, I am all about saving money! Here are some of the EASY ways that I save money:

• Lively: Get started with an HSA today, Lively helps people prepare for tomorrow by making smart decisions about finances and healthcare today.

• Fetch Rewards is a free grocery savings app that rewards you just for snapping pictures of your receipts. That’s really it. Free gift cards on groceries on thousands of products every day, no matter where you get your groceries. Just scan your receipts and get gift cards from places like Starbucks, Target, Ulta, Applebees. Use code QHKBH to earn 2,000 points ($2)!

• Hulu: Discover and watch movies, shows, Hulu Originals, past seasons, current episodes, sports, live news, and more with Hulu. Stream TV shows your way. Try for FREE for 1 month!

• Rakuten/Ebates: Rakuten is my to go way to earn Cash Back from over 2,500 stores like Macy’s, Amazon, Sephora, Walmart and much more. Join Rakuten today for free, and you’ll get a $10 Cash Bonus to get you started! Every three months, you’ll get a Big Fat Check in the mail or a PayPal payment just for shopping. 

• CIT Bank offers high-yield savings accounts that provide a safe, secure way to grow your savings.

• M1 Finance is an easy to use brokerage platform that allows you to invest in Fractional Shares and auto reinvest!

• Webull Get 2 Free Stocks on WeBull when you deposit $100 (Valued up to $1400).

• Budget Templates: Excel budget templates with pre-populated categories and formulas to keep you on track with hitting your financial goals.

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