As income grows, it’s common to reward yourself with upgraded purchases or new experiences. While these changes may feel like a natural part of financial progress, they can quietly lead to what’s known as lifestyle creep, a gradual increase in spending that outpaces your ability to save. Over time, this subtle shift can erode your long-term financial security without you even realizing it.
Our Chief Investment Officer and Senior Wealth Advisor, Matthew Saneholtz, CFA, CFP®, EA, has seen this habit firsthand, discussing it in a CNBC article. “Many feel as though they have to spend more as they progress through career milestones,” he states. At first, it could be a few upgrades or large purchases, but over time, those tendencies can turn into a pattern of spending. This doesn’t mean that you shouldn’t treat yourself or your family after a raise or promotion, but keeping in mind your future goals and long-term needs can help avoid derailment.
Instead of focusing on short-term wants, Matthew shares that putting a raise, or a significant portion of one, into an investment account can help to maintain your wealth and grow it through compounding interest. Also, by automating this process through your bank, you can reduce the temptation to spend it.
Additionally, reviewing your finances regularly and documenting your inflows vs outflows can help ground you. By taking a look at your overall financial picture, you can more clearly see the costs you’re taking on and if they’re of benefit to you.
Lifestyle creep is quiet, but can be something to look out for. By prioritizing your long-term needs over your short-term wants, you can avoid falling into the harmful cycle. Managing an increase in wealth can be challenging on your own, and if you need help, reach out to us, we’re happy to help.To read the full article, click here: https://bit.ly/4kXEoSj
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