Lifestyle creep: Are You Allowing it to Sneak Up On You?
I had a disturbing conversation with a friend the other day, where she told me about her new promotion which came with a parking spot right outside her new office.
I asked her, “What are you going to do with the parking spot, since you don’t own a car?” I was just about to suggest she rent it out, when she chimed in…
“Buy a car! Of course.”
My friend lives and works in the downtown core and has very little need for a car given how accessible public transportation is.
“Are you sure? Have you done the math?” I asked.
“Well roughly, I calculated that between payments, gas, insurance and maintenance I’ll only have to allocate $50 from my current budget and the rest will be covered by my raise.”
This was incredibly disturbing to me. Can you believe it? With a new promotion she’d have to tighten up her existing budget even further to afford a car, which I know she definitely hadn’t been planning to purchase. She’d fallen victim to lifestyle creep!
It is so easy to get caught up with wanting to make all kinds of purchases to enhance your lifestyle when you start to make more money. Items or experiences that you once considered a luxury quickly make their way into the necessity category in your mind.
For a recap on the difference between wants and needs you may want to watch the LimorTV episode on Living Within Your Means.
You should determine a baseline for your cost of living that you are comfortable with and then when extra income comes your way, plan carefully how you’ll allocate it.