During our oppressive January of illness, one item became a staple around our house: OJ. We’ve never really had juice around our home, except as a splurge for a brunch or vacation or special event. (I know I’m talking about orange juice here, not caviar… I affirm that it is a totally normal grocery item to have all the time for many of us!) But with sick kids & wary parents, somehow it becomes in our home the elixir that we cling to in order to boost immunity and keep something down in low-appetite bodies.
I’ve enjoyed having OJ in the fridge, and it had me thinking, maybe I should start buying it all the time. This, friends, is (a micro example of) lifestyle creep.
What is Lifestyle Creep?
Simply, “Lifestyle creep” means spending more & more of your surplus cash flow.
Investopedia describes it this way:
“A situation where people's lifestyle or standard of living improves as their discretionary income rises either through an increase in income or decrease in costs. As lifestyle creep occurs, and more money is spent on lifestyle, former luxuries are now considered necessities."
“Creep” is a perfect term, because it can be slow, innocuous, and simple, but challenging to return from.
When my husband was working on his Masters degree, we had two little kids, little income, and lived in a super pricey city. Our primary budgeting technique was: "don't spend money". It wasn't very sophisticated! And, not necessarily advisable: there are much better systems out there.
But, in most areas, it was pretty easy to live by the hard line. It meant: no eating out, no takeout coffees, no buying "stuff"... really the default was to assume not spending, and if something came up (like going to a movie with a friend), we'd decide case by case.
I remember specifically looking for activities to do with our toddler, and one of them including a walk over to Dad's school & by the Starbucks. I could occasionally wrap my mind around buying a kids' hot chocolate (for $1.50 or something), but wouldn't get a coffee for myself.
Now that era is 6-7 years in the rearview mirror, and our no-spending hardline is long gone. Once we had a little bit more income, a little bit more margin in the cashflow, the grip we had on everyday spending (or lack thereof) began to loosen. Why not pick up a hot drink when we're out & about? Yes, let's order pizza tonight, I don't want to cook. A change in spending for everyday lifestyle things can "creep" in just that easily!
For others, it may look like a pay raise after years of "paying dues" — with an upgrade to a car or home as a reward.
Is Lifestyle Creep Always a Bad Thing?
No. Google “Lifestyle Creep” and you will get an array of opinions, descriptions, & anecdotes — not all of them vilifying the experience.
One journalist “made do” with a broken, sluggish phone until finally upgrading. Then she discovered: wow, it is a lot easier and better to connect with my people with a communication device that actually serves me! The experience had her revisiting her micro-apartment and wondering if upgrading it, too, would bring with it social/relational improvements.
My husband worked for several years with a non-profit and felt the pinch of a limited surplus cash flow (largely this was because he was saving like a maniac towards the down payment of our now almost-paid-off house, so it was all a huge win in the long term… for me at least! ;). One manifestation was his perception that he could afford to go to a movie at the theatre, but couldn’t buy popcorn. Years later, when he had switched into a corporate role with more surplus cash, it was a great joy to him to buy movie theatre popcorn!
As with most adult decisions, there isn’t a good/bad dichotomy, only choices and priorities. One person might continue to feel strapped for cash through the year, but add another holiday as his pay increases; another might add extra daily visits to the coffee shop with no regrets.
A Healthy Approach to Surplus Cash
So, what do I do about it all? Do I embrace the lifestyle "improvements" that can easily or naturally come with increases in income? Do I spend my life living with the same level of spending and attitude towards anything extra as a luxury?
When I received a raise at my first career job, my boss (10 years my senior & a financial ninja) advised me: Decide what you want to do with the difference in your paycheck. If you want to put it towards a car, or a trip, or long term savings, or whatever… just decide & set it aside. Otherwise it will be absorbed into everyday spending. And oh, how it was true! Another dinner out, a few more coffee breaks across the street, a visit to the sale table at Anthro… It’s so easy.
Worse, what financial writers warn is not just that you absorb what you have, but that it can easily roll into overspending by committing to payments and purchases that later become unsustainable.
I am a constant advocate for mindfulness with money: paying attention to how (and to whom) you spend your money, and whether that is actually what you want. So, in that sense, the creepiness of Lifestyle Creep is, I think, a dangerous prospect.
But, it also makes it easy, because the “tips” are nothing extraordinary, nothing revolutionary. They are the same as the drum I beat around here all the time. Slow down. Pay attention. Do not put your wallet on auto-pilot. Ask: Is this the way I want to spend my money?
Even just asking those questions makes you less vulnerable to anything "creeping" up on you. You can think about what you value, spend to reflect that, then go ahead with the confidence of your decisions! No fear!