We all like to treat ourselves from time to time. Taking an Uber instead of the bus, upgrading to some fancy sourdough bread instead of your usual loaf, or splashing out on some cashmere to cosy up in during the winter.

You may be spending more money and making these little upgrades because your income has increased. Maybe you had a pay rise, or you switched jobs and now have a bigger salary.

If that’s the case, there’s a name for it: lifestyle creep.

In a nutshell, lifestyle creep is the common pattern of spending more money as you earn more money.

As the name implies, lifestyle creep can happen gradually and without intention. It can be a result of “keeping up with the Joneses”, whether that’s friends or family, or the aspirational content we all consume on social media. 

It’s only natural to want to improve your quality of life by purchasing nicer things, whether that’s luxury holidays, the latest phone, or eating out more often. When you earn more, you want to enjoy it. You deserve it, right? 

But the problem with lifestyle creep is that you often don’t notice your spending going up, and these little upgrades start to feel like essentials rather than occasional luxuries.

Lifestyle creep is particularly sneaky because it can go unnoticed for a long time. If you’re spending more than you’re earning, it could deplete your savings, land you in debt and cause financial stress.

Even if your outgoings don’t exceed your income, the fact you’re spending more than you used to could still cause problems, and start to throw you off track in achieving your money goals. It’ll be more difficult to save money and build a financial safety net. 

Once you’ve crept along the lifestyle scale, it can be hard to creep back. But, it is possible to  manage this phenomenon, trim your spending and achieve your goals – while still enjoying some well-earned treats. 

How to deal with lifestyle creep – and reach your financial goals

• The first thing to note is that lifestyle creep is unavoidable for most people, but understanding it and managing it will help improve your finances.
  
• Closely track your spending each month to work out what has changed. Review your credit card and bank statements to spot where you’re spending extra money. Perhaps it’s more Pret lunches, more Ubers, or some subscriptions you had forgotten you’d taken out.
  
• Next, remind yourself of your money goals. Whether it’s to buy a home, pay for a wedding or go on a once-in-a-lifetime holiday, focusing on this will help motivate you to tackle your spending.
  
• Now it’s time to budget. We have lots of great tips in The Octopus Money Guide to Budgeting and How to budget successfully. A budgeting app is a really useful way to monitor your spending. Revisit your budget often to make sure lifestyle creep isn’t creeping back in.
  
• Try the “pay yourself first” savings method. This is where you transfer money to your savings account as soon as you get your salary, and you’re free to spend what’s left over. The strategy ensures you’re prioritising saving and, therefore, edging closer to smashing your goals.
  
• Automate your savings. Whether it’s paying money into a savings account, investment account or pension pot, setting up automatic payments will make it as easy and hassle-free as possible.
  
• Limit the use of credit cards. If your salary has gone up, you may find it easier to get a credit card, and a larger credit limit. You may also think that if you’re earning more it’ll be easy to pay off the balance each month. Stop! Frequent use of credit cards can be a slippery slope into debt and a whole heap of problems. It can also affect your credit score. If you’re trying to rein in your lifestyle creep, it’s best to steer clear of credit cards as much as possible.
  
• Be mindful about your spending and think about what adds value to your life. Just because you can afford something doesn’t mean you should buy it. Before making a big purchase, ask yourself if it’s necessary and if it aligns with your financial goals.
  
• Finally, it’s ok to treat yourself and add some luxuries into your budget. You may have realised that you don’t need that expensive TV streaming service and cancel it to free up some cash. But you may also have identified some things that really improve the quality of your life, and that’s ok. Just keep an eye on your budget and stay focused on your goals to avoid lifestyle creep in future!