The Silent Killer!!!! (Of Your Wallet)

I am, of course, talking about “lifestyle creep”.

“What’s lifestyle creep?” you ask.

Starting Out

Well, to answer, let’s consider a little thought experiment. Say you are a young professional, fresh out of college and starting your first job. Your take-home pay is roughly $3,000/mo and you live in a HCOL (high cost of living) city, where rent for a 400 sq ft studio apartment is about $1,260/mo.

You don’t spend too much, mainly because you don’t have a car, and you don’t drink (even though you LOVE going out on the weekends… just as long as there isn’t a cover). Your expenses at this time are pretty low and are few: rent, utilities, cable/internet, groceries, you know, the necessities. There’s the occasional trip or eating out at a nice restaurant, but you don’t do it too often. At the end of the month, you’ll probably save roughly $500-$800 after expenses each month. Not bad!

Moving and Movin’ On Up

After a few years and a few promotions at work, your take home pay is now around $3,200/mo. However, you’re starting to look at other career opportunities for different reasons, one of them being your salary. See, you are now at a point where the next big pay bump may not happen for several years. At the same time, some of your expenses are growing (like rent). When you live in an apartment, the one thing that’s for certain is your rent going up. At year one, you paid $1,260/mo. Into your third year, you’re now paying $1,325/mo. You want to continue living in a nice apartment and you want to continue living alone… but that rent is outrageous to you. So, you find a new job where your take-home pay jumps to $3,500/mo and make your move.

Disposable Income & The Creep

You have a new, higher-paying job, live in a new HCOL area, but your rent is around $1,290/mo for a 700 sq ft 1-BR apartment. AND you have a decent savings account that you’ve built over the course of 4–5 years. In your mind, you’re a genius and you pull off a great money-hack.

But… you now have a car, bought brand new, $15,800 of which you financed (4.6% APR, 60-mo, $293/mo). Also, as you navigate your new area, make new friends and take on a more active love-life, you develop a taste for restaurants, weekend trips, festivals, concerts, and just furnishing your life with stuff. Just about every week, you’re going to a new restaurant (or the same ones) at least twice. Without realizing it, you’re spending over $200/wk on just eating out (not to mention gas, parking, tolls, etc). Sometimes, it’s up to $500 for a trip over the weekend (hotel, gas, food, etc). Oh, and don’t forget the things you buy for yourself because you want to upgrade: new phone ($750), new laptop ($1,000), custom-frames for Studio Ghibli posters bought from Etsy ($500). There’s more, but you get the picture. One thing you begin to notice is that less and less money is leftover each month, after all of your expenses. What’s worse is that in some months, you actually have to dip into that emergency savings to cover the remainder of your monthly expenses. This is the impact of lifestyle creep.

The Consequences of Lifestyle Creep

So first off, sorry for all the bold font peppered throughout this article so far. For me, it allows me to emphasize the important items I want readers to focus on in particular. Going back to the example above, lifestyle creep is essentially an unnoticeable increase in spending fueled by an increase in disposable income. If you only think about your purchases only at the time of purchase (like the person in our thought experience), you are susceptible to lifestyle creep. You are more likely to jump on a “sale” without a second thought OR upgrade constantly, and those purchases, both small and big, all add up.

Thinking about it now; it kinda makes sense: the more disposable income you have, the more you make, the more money you are likely to spend. On its face, it is not a bad thing at all. I think most people would agree that as you get older and make more money, your expenses are likely to increase. However, without proper budgeting, that creep will either rob you of your savings, make it hard to save, or lead you into debt. Long-term, it could leave you vulnerable to “Life Happens”.

The person in this example ultimately learned to rein in their spending and budget, but only after draining most of their savings and starting over at a new job in another part of the country. If you haven’t guessed it by now, that person is me!

If you wish to share your story involving lifestyle creep, please feel free to do so in the comments, or you can e-mail me at denofdollarsblog@gmail.com.