How to manage lifestyle creep when the odds are against you (and they’re always against you)

Back in 2008 when the financial services industry nearly took down the global economy, as a homeowner I was keenly aware of the pull of lifestyle creep.

Everyone believed the housing market would always go up, up, up. So they started spending wealth they didn’t have, confident the magical housing boom would go on forever.

I was skeptical. But still I wondered if we were missing out by taking a conservative approach to our family’s finances while everyone else appeared to be living it up. Was I unnecessarily keeping myself down by being too conservative?

Then, I was shocked to learn that a family I knew in the wealthier neighborhood a few blocks away had their house foreclosed.

They always seemed… not just comfortable, but flush. They had a beautiful home, recently bought a boat, had their kids in multiple sports, took nice vacations. Clearly, they had plenty of money.

It turns out, they didn’t. And that story was not uncommon in 2008. Over the next two years, a handful of families in that upper middle class neighborhood went through foreclosure.

And even today, many people who appear to be rich are living essentially paycheck to paycheck.

How does this happen? Besides the magical thinking that drives all economic bubbles like the housing bubble in 2008, one of the main culprits is lifestyle creep.

The entire world is against you

Yes, really. Well, maybe not the entire world. But yes, really, the entire world.

One wonderful thing about capitalism is that it lets an ambitious person climb as high as they possibly can. There’s no limit!

One terrible thing about capitalism is that it makes everyone feel they have to climb just a little bit higher from wherever they are now. There’s no limit!

Every day we are bombarded with advertising telling us we should want more—fancier clothing, better tech, more exciting vacations, a bigger house, etc. etc. ETC. Meanwhile, everyone on social media is presenting their successes and fun and exciting news. TV shows us characters living lifestyles they couldn’t possibly afford on their likely salaries. Even our own family histories may pressure us to strive for more.

It’s the rat race. Happiness comes from getting the prize at some finish line in the future. Sadness exists wherever you are now. The virtuous have wealth, and the wealthy are virtuous. And there is always someone who has it better than you. Whatever it is you want—and you want everything—you can have it. These are the messages of American capitalism.

We feel constantly like we’re falling behind.

It’s no wonder many people live life with the phrase, “When I get a little more money, I’ll…” stuck on repeat in their heads. Whatever it is we want, we’re pre-programmed to spend any little bit of additional money we bring in.

Or put another way, we’ve already emotionally spent that additional money by the time we get it.

That’s what leads to lifestyle creep. How someone making seven times what my 26 year old kid makes can still be living paycheck to paycheck.

Ambition is not inherently bad.

I’m going to take a side trip here to say that ambition is not inherently bad.

It’s not wrong to want things you can’t afford today, to want better for yourself and those you care about.

Ambition is one of the ingredients of growth and self-betterment. An ambitious person is more likely to take action, to solve problems, to plan ahead. Ambition is a key element in overcoming challenges. It’s what makes you step up to the next rung on the ladder.

But you should be ambitious for the right reasons. Your reasons. Not their reasons.

Don’t give others control over your decisions

This is why I talk so much about core values with my clients, and why I’m always challenging them to examine whether they’re being moved by intrinsic desires, external influences, or default expectations.

Intrinsic desires are the things that matter to you. It’s possible to want two conflicting things at the same time—more balance and a higher paying job, for example, or moving somewhere else and staying close to family.

External influences are those messages and pressures from others that make you feel you should do or be a certain way. Keeping up with the Joneses. Chasing the prize. Being a good parent/child/friend/employee/volunteer/etc.

Default expectations are the unquestioned assumptions about your life path. Of course you’ll do X. It’s just what people like you do. Like in the musical Hamilton, when King George reflects on Washington stepping down.

“George Washington’s yielding his power and stepping away.
Is that true? I wasn’t aware that was something a person could do.”

King George in Hamilton

Only when you can articulate the motivations, pressures, and expectations at play can you be truly intentional about your decisions. Without intentionality, you may end up ceding control of your decisions to luck, fate, or other people who have their own agendas.

So what can you actually do about lifestyle creep?

It’s not hard to find suggestions for things you can do to fight against lifestyle creep. Just ask Google’s Bard. Make a budget. Be mindful of your spending. Resist the urge to spend more. Reflect on your priorities.

Yeah, yeah, Bard, we get it. If we spend too much, we should spend less. If we are depressed, we should do things that make us happy. If we overeat, we should control our portions. If we procrastinate, we should break projects into smaller tasks.

If you’re reading this blog, you already know all the things an AI bot will suggest. You’ve probably heard them all before, and they haven’t actually worked.

Which is why I’ll add a couple of my own, mostly focused on twisting perspective to help with thinking about the fundamental problem differently.

These particular exercises obviously won’t be useful to everyone. Each person’s situation is unique and complex, which is why a book, a class, or an AI bot so often fail to yield results.

How do you decide each purchase?

Imagine if this month’s credit card statement arrived with this subject line:

“Your lifestyle creep balance is due.”

Obviously not all your charges this month would fall under lifestyle creep, right?

Right?

It sounds silly, and that’s because it is, but some of the best perspective exercises feel silly at first.

Look at every charge this month. Don’t categorize them or put them in buckets. Don’t anonymize the transactions by dumping them into a budget report. This just distances you from the actual decisions that led to the total you owe.

Instead, think about each one. Each time you ate out. Each streaming service you pay for. Each purchase of clothing, home improvement stuff, vanity products, groceries. Think about the decision-making process that went into each one.

What was truly essential? What was bought for your reasons? What was bought for their reasons? What was merely on autopilot?

How might this exercise affect your daily habits next month so you can feel more in control when your “lifestyle creep bill” comes due?

Imagine your neighbor going through foreclosure

Think of one of your neighbors, someone you only kind of know but who lives a very nice lifestyle. Gorgeous house, couple of cars, kids always in the latest fashions.

Now imagine that they are, in fact, living paycheck to paycheck, barely covering their bills. One of them unexpectedly gets laid off, and suddenly they can’t pay their huge monthly mortgage. They lose their home.

The point here isn’t to encourage good budgeting or to judge people’s spending habits. I’m the last one anyone should be getting financial advice from. No, my point is to remind yourself that not everything is always as it seems.

Envy is a powerful motivator. It’s also something you can control when you’re aware of it. We all feel it in some ways. Not everyone feels it in the same way or envies the same things, but we all feel it.

If you can visualize your neighbor living on the edge of disaster, is their lifestyle still such a strong influencer of your own desires and decisions?

What are your suggestions?

I know some of you are really good at self-awareness and being intentional about your choices. In what ways do you break through all the external noise and make sure you are living by your values, not their values? I would love to hear it!

If you’ve got something great, I’d also love to have you guest blog here. Let me know.

I can help.

I work with top executives and middle managers to improve their leadership skills and the effectiveness of their teams. I also help individuals identify and achieve their personal goals. Would you like to be more effective, be more empowered, and feel fully prepared for your next steps?

Let’s talk.

You can help.

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