Do Not Fall Into This Financial Trap | How To Avoid Lifestyle Creep

In this episode of the Mind Money Soul podcast, I’m going to be sharing how to avoid a lifestyle creep.

Lifestyle creep is when an individuals standards of living improves as their discretionary income rises and former luxuries become new necessities. The rise in discretionary income can happen either through an increase of income or in a decrease in costs. Essentially this means you have more ‘fun’ money to play with (things that aren’t going towards bills or debt) but instead of keeping the same lifestyle or investing/ saving your extra money, you choose to inflate your lifestyle to meet your pay check. 

Why is this a financial trap? It can totally derail your future plans (including retirement plans or clearing your debt) and prevent you from reaching your big happy goals. The dangerous thing is that it can start really small. You might choose the most expensive thing on the menu, or grab an Uber more than you choose to walk. All of these little purchases that you deem ‘necessities’ will become an integral part of your life. The issue isn’t with living a boujee lifestyle, it’s the fact that you're not putting a financial buffer in place and you’re not going to feel the financial effects of this increase of money. The key lesson is: having more money allows you to get closer to your big happy goal but you have to be intentional with that money. 

In this episode:

+ Understanding the term ‘lifestyle creep’
+ Why lifestyle creep is a financial trap
+ How lifestyle creep starts small and filters up
+ How to build wealth by saving and investing
+ Why you need to have a financial buffer
+ What wealthy people do to protect and grow their money
+ 3 tips on how to avoid lifestyle creep
+ The importance of being intentional with your money
+ The benefit of automating your finances
+ Why you should set long term exciting goals

Timestamps

00:00 - Introduction
00:16 - Has this scenario happened to you before?
01:04 - What is lifestyle creep?
01:48 - Why is lifestyle creep a financial trap?
02:12 - The danger of falling into lifestyle creep
03:20 - The mindset and beliefs of lifestyle creep
03:42 - How to build a financial buffer by saving and investing
04:26 - What really wealthy people do with their money
04:56 - How to build wealth and become financially free
05:34 - How to avoid falling into the trap of lifestyle creep
05:58 - Tip #1: Show yourself what you're missing out on
07:17 - Tip #2: Automate your Finances
08:26 - Tip #3: Setting long term goals
09:32 - Key takeaways and wrap-up

Resources

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