Lifestyle creep. It’s a trap that is easy to understand and easier to fall into. The basic idea is that increased income automatically translates into increased lifestyle expenditures. We make more, we spend more, and we live larger. Sky-high inflation has created this phenomenon’s ugly cousin. Increased expenditures without the luxury of increased income or the benefit of a larger lifestyle. This revelation hit me after a trip to the gas station and grocery store last week. First, filling up my gas tank was twice as expensive as it was a year ago and then I noted—and I’m not typically very observant in this space—a 25% increase in the price of chicken over the last couple months. Two regular purchases, but both highlighted the very real impact of inflation.
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There’s no doubt we are all experiencing the pain, it’s just a question of how much. And while I can’t offer you a magic elixir to make it all go away, I can offer these six ideas that might help:
Really revisit your spending.
Hopefully, this is something you’re already doing on a regular basis, but now I’m talking about going deep. It’s an exercise that will provide a baseline from which you can create your plan. When we did this, it was an absolute eye-opener. While our big-ticket expenses, house, and cars, have been steady, everything else is up significantly more than the 8% inflation in the headlines. What’s worse, even our mortgage will likely see a bump once the skyrocketing real estate values (and associated taxes) catch up. Whatever the situation, the first step to a solution is really understanding it.
Start on the margins.
When cuts are needed, look at cutting down or out purely discretionary expenses first; in other words, those nice-to-have, but not necessary expenses. Need some candidates? Endless streaming subscriptions, frequent eating out, entertainment choices, and online shopping come to mind. Hopefully, these cuts will be enough to fill the gap created by inflation. If not…
Shift to a more deliberate and cautious approach.
Here, I’m talking about necessary expenses done smarter. Taking the sedan instead of the truck on road trips, carpooling, revisiting your thermostat settings, savvy food shopping leveraging sales and meal plans. Examine the personal property you own. Are there items that you could turn to cash without creating a family crisis? If that doesn’t close the spending gap…
Consider big changes and get the big decisions right.
Big changes could include looking at adjustments to your housing and transportation situation, temporarily reducing retirement savings, or refinancing existing debts to reduce mandatory outlays. Be cautious when making large long-term commitments. In today’s environment, less is more.
Don’t promote your spending.
Now, more than ever, it becomes important to avoid self-induced lifestyle creep. Pay raises, promotions or windfalls that come in other forms should be safeguarded in savings to create flexibility in the future, not consumed before you get them like we sometimes do.
Make more or ask for more.
Admittedly, this one is sometimes easier to say than it is to do, but if you’ve ever thought about adding a part-time job, switching to a more lucrative job, or starting up that side-hustle you’ve been considering, now may be the time to pull the trigger. Just be sure to find the balance in the “sometimes you have to spend more to make more” equation. If you’re already working to your limit and are a valuable employee, maybe you can approach your employer about getting a raise. You know what will and won’t work with your employer, but sometimes it doesn’t hurt to ask.
Lifestyle creep’s ugly cousin looks like he’s here for an extended visit. Take the time to address the challenge, sooner rather than later.
