Prevent Lifestyle Creep
Congratulations on your raise! Now you can afford to buy that thing you’ve always wanted. And make that upgrade. And subscribe to — wait. What happened to your raise? Well, it succumbed to “lifestyle creep,” a habit of spending more as you earn more, to the point that you end up with no more money than you had before your raise. This dangerous habit can prevent your savings from growing and debts from being repaid. Suffering from lifestyle creep? Learn how to keep it at bay.
- Set a budget. Keep tabs on your spending for about a month. Then, determine which expenses are absolutely necessary and deduct them from your monthly income. Next, factor in your savings goals and treat them as necessary expenses, setting aside money every month for saving and investing. But don’t forget to save a bit of money for fun!
- Revise your budget regularly. Salary change again? Find yourself spending more on something than you thought? Make adjustments to your budget as necessary.
- Spend responsibly. Take advantage of coupons, sales and pre-owned deals. Ensure your credit card balance is never more than you can pay off to avoid paying interest. And if you’re looking to upgrade your personal possessions, space out the purchases instead of buying many items in a row.
- Resist peer pressure. Have friends that always want to eat out or go shopping? You don’t need to dump your friends, but you should be honest with them when you can’t afford to go out. Try recommending free alternatives for entertainment. And if you do join them on a night out, don’t feel like you need to spend as much as they do.
Lifestyle creep isn’t inevitable. Contact your Client Advisor to learn helpful money management strategies and responsible ways to save.