The Big (Lifestyle) Creep

At the beginning of 2023, I decided to really look at how I spent my money in 2022, according to my primary credit card. It was an eye opener, especially since I didn’t see myself as someone who eats out much, but dining out was one of my top spending categories. I guess all of those impromptu trips to get a latte and pastry really add up! That got me thinking about the days when paying more than $10 for a fancy coffee and croissant was simply not an option.

When you are young and just starting out, you realize pretty soon that your paycheck doesn’t go very far after covering the essentials of independent living. These are the years that, if your parents didn’t teach you about living within your means, you could fall prey to credit card and other types of revolving debt. These are also the years of bargain shopping, coupon clipping, and just plain doing without stuff.

But at some point in your career, whether you job hopped to better positions with higher salaries or deliberately worked your way up the ladder, you realize you are no longer worrying about whether the produce you are buying is on sale or how you are going to pay for both the car repair and the vet bill in the same month. Fancy coffee drinks and kouign-amann are not rare treats, but weekly staples. All of sudden, life seems a little easier when you don’t have to worry about whether you can afford it, or not.

But that is when you need to start paying attention. As you get accustomed to higher and higher income levels, lifestyle creep takes hold. You can’t imagine not having half a dozen streaming video services at your disposal. Of course you should support your children by buying them cars and giving them down payments for houses they otherwise can’t afford, if you are able. Your struggles are over, so everyone can just relax and enjoy the ride.

The fact of the matter is, at a certain level of income, you stop budgeting. This is fine as long as you have income. But at some point, you may be back in that place where you need to be critical of every dollar spent. Or not. It is up to you to determine whether you are actively saving enough to be able to support the lifestyle you want once you retire. Doing a simple cash flow projection can give you a baseline that will help define and support future spending and savings goals. Maybe you can engage in some minor budgeting and save for big-ticket items. Or better yet, program automatic savings as a percent of your take home pay, investing dollars on a regular basis instead of mindlessly spending.

I’ll admit to days of reckless spending just because it feels good in the moment. I have a spreadsheet that tracks my monthly utilities and credit card bills and annualizes those, so I can see where lifestyle and inflation are hitting hardest. But I also have a good amount of income automatically going into retirement savings, education savings and taxable brokerage accounts. If you are able to tune in a few times a year, then you will be in a better position to pivot and make necessary changes without too much disruption to your lifestyle.

If you are interested in seeing how well you are living within your means, feel free to reach out to your relationship manager or any member of the financial planning team for a discussion of our services.

Meet Kristan Anderson, CFP^®, CEBS^® »

Read the February 2023 Financial Focus:

• "(Roth) Conversion Therapy" by Kristan Anderson, CEBS^®, CFP^® »
• "Financial Planning 101 – Account Consolidation" by Kristan Anderson, CEBS^®, CFP^® »
• "Charitable Gifting with IRAs" by Victoria Henry, CFP^® »

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