What is Lifestyle Creep?
When income increases, for example after a raise or bonus, many of us are tempted to upgrade our lifestyle. Things that once seemed like luxuries begin to be considered necessities. This is called lifestyle creep (or lifestyle inflation), a phenomenon where expenses creep up with increasing income.
Even though income increases, this doesn't necessarily mean that our ability to save or invest improves. In fact, because expenses increase, some people may feel richer, but in reality, they actually have less spare cash. Many even end up living paycheck to paycheck, even though the amount is larger.
Several factors underlie this phenomenon. First, social pressure to "keep up with the Joneses" pushes us to upgrade our belongings and habits. Second, lifestyle creep is often so gradual that we don't even notice it.
Fortunately, this phenomenon can be managed. One of the most effective strategies is to create a budget and allocate a fixed portion to savings or investments each time our salary increases. Furthermore, it's important to distinguish between needs and wants; not all lifestyle improvements should be met with immediate major upgrades.
A salary increase is certainly encouraging, but if not accompanied by control, it can backfire on our long-term finances. Lifestyle creep is a silent trap that can erode our potential for saving and investing. With awareness, planning, and discipline, we can celebrate income increases without losing a healthy financial foundation.
Although the economy tends to go sluggish, MNC Leasing continuously plans its ex...
read moreMNC Leasing signed a joint financing and rental generator agreement with Kohleri...
read moreMNC Leasing holds a caring for others event through a Corporative Social Respons...
read more
