Have you ever heard the term ‘lifestyle creep’?
This is process of spending more each year as your income increases.
Maybe right now you’d love to have a boat but haven’t bought one because you don’t feel like it’s in your budget. Next year, you get a raise and now you feel like you can afford a cheap boat. A year after that, you get a raise again and now you feel like you can buy your dream boat.
Replace the boat in the example with clothing, eating out, cable packages, vehicles, housing, etc. Suddenly those seat warmers in the leather seats of your car seem like a “necessity” where they seemed like a luxury a couple of years ago when your car had cloth seats.
I’m not saying there’s anything wrong with increasing your standard of living as your income increases, but it’s important to remember to first focus on increasing your savings.
Keep in mind the difference between a necessity and a luxury.
