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How to Avoid LifeStyle Creep after a Big Payday

Lifestyle Creep – Don’t Let it Happen to You

What happens when you come into money? Whether it’s an inheritance, work bonus, or a sizeable raise, what’s your first instinct?

You want to go out and spend it, right? You feel it’s your right or you just want to celebrate. It may feel good at the moment, but it won’t last long. The after-effects aren’t pretty because they lead to a stage called lifestyle creep.

Creep makes it sound like a slow process, right? It happens faster than you think. Before you know it you’re in the poor house or constantly chasing your own tail trying to get ahead. 

Spoiler alert - you won’t win. 

Understanding Lifestyle Creep

I’m not denying the joy of that big payday and I think you should celebrate it, but not by overspending. 

When you overspend, here’s what happens. Let’s say you decide your large inheritance gives reason to buy a fancier car than you could ever afford. Sure, it helps with you with the down payment or maybe it even pays for the car outright, great. 

What happens after that, though? You must keep up with the car’s maintenance and repairs. They likely cost a lot more than your less expensive car. Now you’ve just increased your regular expenses without the means to do so.

It doesn’t stop there. Now you drive this fancy car, so you feel like you need to keep up with the lifestyle. Before you know it, you’re buying fancier clothing, going out for fancier dinners, and living a lifestyle way outside your means.

It has a domino effect – one nice thing in your life makes everything else seem ‘not good enough,’ so you’ll constantly spend more to feel better.

What Should you do Instead?

I’m not saying don’t spend money. Everyone deserves to spend here and there, but rather than running out and splurging on something you think you need, give it some thought. How do you want to spend your limited resources: money, time and energy? What would mean the most to you long-term, not just a ‘quick win’ like the feeling of getting a new car? Sure, you’re on cloud 9 every time you get in and whiff that new car smell, but that only lasts for a week or so – then what?

Figure out where spending your money may add value. Stop trying to keep up with the Joneses’. That only leaves you feeling ‘less than’ and constantly chasing dreams that honestly don’t belong to you.

Before you spend, sit down and think about your goals. What have you always wanted in life that maybe now you can achieve? What will splurging on one item do for you long-term emotionally and financially? If you can’t come up with anything good, it’s not worth it. Instead, work towards your life goals.

Ask yourself this: what is most important to you? Focus your time, energy, and money there. Look at the big picture, not the instant gratification that coming into money creates. When you take your time, you’ll make smarter choices and get out of the rat race of life.