As you move through your career and begin to earn more over time, you may feel like there is not a lot of extra money left over. If so, you may be experiencing lifestyle creep. Lifestyle creep happens when your spending increases as you earn more income. The increased spending is often due to additional convenience items, like upgrading housing, taking bigger vacations, etc. All of the extra spending can make it feel like you are not making financial progress. To avoid lifestyle creep, consider these three tips:
Establish your long-term goals and have a plan to achieve them. Take a step back to determine what you want to achieve financially and then build a reasonable plan to get there.
Treat yourself in moderation. To bring balance to your spending habits identify what spending brings the most joy to your life, prioritize that spending, and eliminate spending on lower priority items. If you are married, make sure to have a candid conversation with your spouse about what is most important and making choices together.
Imbed savings into your financial successes. As financial wins come your way (bonus, pay raise, tax refund, etc.) be sure to allocate a portion to savings rather than spending all of it. Splitting between enjoying now and enjoying later will help you work toward your long-term goals while also allowing yourself to relish the fruits of your hard work in the moment.
Implementing these tips will put you in a better place and your financial goals will become attainable. Contact us to learn more about how simple actions now can help improve your long-term financial outlook.