It happens so gradually, you barely notice.
One day you're feeling confident about your finances. The next, you're looking at your bank statement wondering how those extra expenses snuck in. Was it the meal kit service? The new car with the slightly higher monthly payment? That splurge on the shiny new gadget? (Or should I say splurges...)
This slow climb in spending is what's called lifestyle creep (or sometimes "lifestyle inflation"). And trust me, it's sneaky.
My husband and I learned this the hard way when we moved to Washington, D.C. from Texas. It was a huge transition. Not only were we moving to one of the most expensive cities in the country, but our combined income was also sliced in half. Michael wasn't working — in fact, now he was paying law school tuition — and yet, we carried on like nothing had changed.
The same nice restaurants. The same nights out. The same lifestyle.
We thought we could manage, but the truth was we were trying to sustain champagne tastes on a (now) sparkling water budget. Cue some very honest, and very uncomfortable, conversations about money.
It wasn't until Covid flipped everything upside down that we finally hit reset. We moved back to Texas (and in with Michael's parents), and for the first time in years, we weren't spending money on rent, dining out, or other extras. When we bought our house later that year, we tried to build a lifestyle that fit our finances — not one that strained them.
Here's what I've learned...
1) Lifestyle Creep Is Sneaky
Before Michael and I even moved to D.C., we made a new budget to reflect our new financial reality. He was taking out student loans for law school, which meant my salary could go toward covering our expenses.
On paper, everything looked great; for the most part, we wouldn't have to change too much about our basic lives, as long as we cut back on big-ticket expenses. And so we carried on accordingly.
Two years later, when we sat down to tackle the credit card debt we'd accumulated, I expected the main culprit to be surprise splurges. They weren't.
The real damage was done by the small stuff... stuff we were so used to having, we didn't even think to worry about it. Fresh flowers every week. Lattes and fresh bagels from the deli down the street. Grabbing takeout instead of cooking. Adding a streaming service. These were all things we had afforded for years.
And therein lies the problem. Over the years, we had grown so accustomed to all these small upgrades, we didn't even think about them anymore. They had quietly reshaped our expectations... so we didn't even notice how expensive they all were until the bills were staring us in the face.
Lesson Learned: It's not just the splurges that stretch your budget; it's the everyday habits that slip under the radar. It was an eye-opener. We made big changes — cooking more at home, cutting back on wants (so long, fresh-cut flowers), and paying closer attention to the little things.
2) Comparison Is The Fastest Way to Overspend
Before the pandemic, I was a bit of a shopaholic. If I saw someone wearing it or Instagram raving about it, I had to have it. Beauty creams, clothes, accessories — my shopping habits were on autopilot.
When I was able to "afford" this kind of spending, it never seemed excessive. I was still saving, still contributing to my retirement account, still investing, still paying my bills and rarely carrying a credit card balance. But after seeing how this kind of trend-chasing was affecting our finances, I knew I had to make some big changes.
Then Covid hit.
We weren't going out. No one was around to see me or my newest outfit. And just like that, my shopaholic tendencies disappeared.
During the pandemic, I stopped buying things because they were trendy or popular. Instead, I focused on what I actually liked. In the process, I found my style — and a version of myself that didn't feel like I had to keep up with everyone else.
Lesson Learned: When you only buy things that genuinely fit your life and personality, you spend less — and enjoy what you have so much more.
3) It's Not About Deprivation; It's About Intention
So, once we got our finances together, we decided to never spend money again — even as our salaries grew.
Just kidding!
Of course we spend money. But even with more income, lifestyle creep doesn't just go away — it still takes effort to keep it in check.
[Lifestyle creep can hit you even when you're earning more than ever. Read more in 66% of Americans Are Living Paycheck to Paycheck — Here's How You Can Break Free.]
To avoid slipping into old habits, we now try to spend with purpose. For example, we implemented a two-week waiting period on new purchases. Most of the time, we completely forget about whatever we were jonesing over before the waiting period ends. But sometimes, it's still very much on the front of our mind, and that's when we look at whether we can afford it.
We've also started using everything "until the wheels fall off." And this applies to more than just cars. Most of our current clothing expenses are simply replacing items we love that have become worn. The laptop I'm typing this on is the one my husband bought for law school. At least half of the furniture and decor in our home are family pieces that have shuffled between relatives for years — some even spanning multiple generations.
And most important, we started spending on what was important to our happiness. Like getting a treadmill so we can still work out on those hot, 110 degree Texas days. And hiring a housekeeper to help us keep our home clean and organized, giving us more time to focus on the twins (and each other). And building up our emergency savings fund so we can sleep at night knowing we're prepared for life's curveballs.
Lesson Learned: Managing lifestyle inflation doesn't mean never spending money. It's about spending intentionally — on the things that matter most to you.
4) A Reset Can Sometimes Be a Step Forward
Speaking of curveballs, life threw us a big one in 2023. With twins born just the year before, we were already living on a lean budget to cover diapers, daycare, and all the other baby essentials. Then the publisher I wrote for shut down, and for the first time in my career, I found myself unemployed.
Four of us living on one income meant one thing: Our lifestyle had to change — fast. And this time, we knew how to handle it.
We cut the housekeeper. We set a very strict grocery budget (goodbye, impulse buys at Whole Foods). Dining out? Rarely. Discretionary spending? On hold. It wasn't easy, but it was necessary.
And honestly? It was just a bit freeing. Scaling back reminded us how far we've come on our financial journey and how important it is to build a lifestyle that fits our circumstances. Even though we're back to living on two incomes, I've carried many of these new changes forward. If all goes according to plan — which it never actually does — we'll be in a solid place to achieve some big financial goals in 2025.
Lesson Learned: Sometimes, hitting reset is exactly what you need to get back on track. You'll be amazed at what you can accomplish when you approach life's obstacles as puzzles waiting to be solved.
5) Lifestyle Inflation Isn't Inherently Bad
This is probably a controversial opinion for someone who writes about personal finance — especially someone who has seen firsthand how growing expenses can sneak up on you — but I truly believe lifestyle inflation isn't inherently bad. In fact, upgrading your life can be a good thing when it's intentional.
It's perfectly natural to want to enjoy a better quality of life as your income grows. What's the point of working hard if you never get to enjoy the fruits of your labor?
The goal isn't to avoid lifestyle inflation altogether — it's to manage it. To make deliberate choices about what you spend on and why. To strike a balance between enjoying your life today and securing your financial future.
My favorite tool for managing lifestyle inflation (and just general inflation) is the 50/30/20 budget. This framework teaches you how to create a sustainable lifestyle where your needs are covered, your wants are enjoyed without guilt, and your savings are growing steadily.
[Curious about whether the 50/30/20 budget will work for you? Check out The 50/30/20 Budget Gets a Lot of Hate, But Here's Why I Still Love It.]
Unlike a lot of advice that says you should funnel every raise, bonus, or windfall into savings or investing, the 50/30/20 budget acknowledges the very human desire to feel like we're getting something tangible out of our hard work.
In other words, the 50/30/20 budget makes sure your expenses grow in proportion to your income, helping you stay ahead of lifestyle creep before it even begins.
Lesson Learned: Lifestyle inflation isn't the problem — losing balance is. Tools like the 50/30/20 budget help keep your spending in check while leaving room to enjoy what you've worked hard for.
How I Found Financial Freedom by Facing Lifestyle Creep
Lifestyle inflation isn't just a concept I've read about — it's something I've lived through. I know how easy it is to fall into the cycle of spending more as you earn more... and continuing to spend more as you earn less. I've made the mistakes, learned the hard lessons, and come out on the other side with a clearer sense of what really matters.
The biggest takeaway? It's not about avoiding lifestyle upgrades altogether — it's about being intentional and embracing balance. It's about understanding what adds real value to your life and letting go of the rest.
By focusing on the lessons I've learned — paying attention to the little expenses, making intentional choices, and finding a framework to keep things balanced — I've been able to build a life that fits our finances instead of one that strains them. My hope in sharing them is to help you avoid the mistakes I made and build a financial life that works for you.
Because at the end of the day, the goal isn't just to earn more. It's to use what you have to create a life you love — one that's rich in every way that matters.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
