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3 Keys to Avoiding Lifestyle Creep

There’s nothing wrong with driving a nice car, wearing nice clothes, or living in a nice house. When driving a nice car, wearing nice clothes, and living in a nice home, however, becomes a financial burden, then yes there’s a problem.

This situation occurs often with individuals–sometimes consciously, but usually subconsciously–trying to keep up with the proverbial Joneses.
For example, a young doctor is feeling pretty good about himself. After all, he  belongs to a prestigious profession.  With that prestig, he feels entitled to an expensive home and an expensive car. And let’s not forget about the prestigious country club membership, the private chef, and designer clothes.


All while still paying off student loan debt totaling nearly $150,000.
Subconsciously, the doctor succumbed to lifestyle creep!

This isn’t, however, about a young doctor inadvertently buying a lifestyle he or she can’t afford.  It’s about you.


How do you react when your neighbor gets a brand new car?

You wouldn’t consciously say something like, “I’m going to buy a nicer car, even though I can’t afford it!” or “Damn, that’s nice. I want one too.”


Subconsciously, however, you’re feeling a bit envious or perhaps a little insecure. You grumble as you get into your older model vehicle, the one without all the cool gadgets your neighbor’s car has.  You begin to wonder what your neighbor’s doing to afford the fancy things and you’re probably counting their money. 


Hello, new car! Hello, lifestyle creep!


Here’s how to avoid this scenario.

1. Establish long-term goals.  Those who have no goals have no direction. Those who have no direction pay little attention to where their decisions are taking them.  Set short-term and long-term financial goals.  Formulate a plan to achieve those goals.  Follow the plan.  You’ll eventually get what you want without the burden of debt.


2. Create a budget.  Control where your money goes.  If you have no goals, no purpose, no direction, it’s easy to let pride and jealousy dictate your financial decisions.


3. Maintain values.  Money is important. It provides freedom. Why would you give up that freedom by going in debt to buy something you don’t really want in order to impress someone you don’t even know? If you value freedom, and keep your goals and values front of mind, you’re less likely to feel the pressure to buy things you can’t afford. 


Avoid lifestyle creep by remaining vigilant and focused on long-term financial success, and on what matters most.