However, these thoughts and feelings may be signs that your higher spending is happening automatically, rather than intentionally, Lyons says. “I think there’s something to be said for living a life of design, as opposed to a life of default,” Lyons says. “And when you allow lifestyle creep to take over, then you end up with a life of default.” Lifestyle creep can happen to anyone, no matter their income. Shah says that when her organization asked high earners (those with salaries of $100,000 to $500,000) to name their top

financial challenge, nearly half stated an inability to save enough. This highlights an important fact: There’s no outearning lifestyle creep.

WHY IS LIFESTYLE CREEP DESTRUCTIVE? One of the most detrimental side effects of lifestyle creep is that spending more inevitably means saving and investing less. This problem is particularly acute for younger savers, who have the most to gain from investing early. Thanks to compounding, even small investments have the potential to grow significantly over a long enough period, said Gandhi, who's based in Malvern, Pennsylvania. But if your spending consistently increases with your income, there’s none left for investing. For older investors planning for retirement that's about five to 10 years away, lifestyle creep brings a different danger. These savers tend to be at the peaks of their careers in terms of salaries and bonuses, and often spend more lavishly on luxury items, such as homes and cars. However, if they’ve been earning that high salary for only a short period, their savings may not be sufficient to continue that lifestyle in retirement. “This either forces them to work longer or cut expenses in retirement — and both options can be difficult to stomach,” Gandhi said. Lifestyle creep can also lead to additional life stresses, Shah says. For example, if your lifestyle becomes dependent on a certain level of income, what happens if you want to switch jobs or careers? “I’ve seen far too many people who are stuck in a job they hate because of this,” Shah says.


There are several ways to keep lifestyle creep at bay, but Shah, Gandhi and Lyons all agree the best place to start is to create a financial plan and a budget, and stick with both. For Shah, the first line of defense is not overspending on housing, often someone’s highest expense. Generally, she suggests clients keep housing costs below 25% of their net income. And, if the amount they’re saving falls below 20% of their net income, that could be lifestyle creep crawling in.



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