Page 22 - Office VIBES® Magalogue

Recent research by Starling Bank found that almost a third (30%) of people earning over £100,000 don’t have enough money to pay for essential bills and groceries because they are overspending on luxuries. This phenomenon is known as Lifestyle Creep (or Lifestyle Inflation) which means that your spending increases as your income rises due to buying non-essential goods and services such as expensive memberships, dining at fancy restaurants, jetting off on luxury all-inclusive holidays or a treating yourself to high-end car that you have to put on finance as your budget won’t stretch to an outright purchase.
You don’t have to be earning over £100,000 to be impacted by lifestyle creep, it affects young savers to near retirees, all of whom are spending beyond their means. For young consumers who are enjoying their first well paid job, they are enticed by things that were previously out of reach instead of saving for their first home or paying off student debt. For those who are nearer to retirement age and most likely in their peak earning years, the occasional extravagance doesn’t seem excessive but the money could be better spent paying off the mortage or improving the pension pot. Overspending is understandable as you want to improve your quality of life but when your lifestyle upgrades get out of hand and you’ve got more money going out each
month than you’re earning, it is time to address the lifestyle creep that has invaded your life.
Experian describes the warning signs of lifestyle creep as:
• The things you used to think of as aspirational or
luxury spending, such as a high-end car or the new iPhone every time it's released, now feel like necessities
• There's less money than you expected in your bank account at the end of the month, and you don't have a clear idea of where it went
• You're more comfortable with increased day-to- day expenses, like daily takeout lunches or higher grocery bills from a premium supermarket
• Theideaofgoingbacktothewayyoupreviously lived in order to save money seems very difficult
If your credit card bills are spiralling, you’re struggling to pay long-term debts or you are simply spending to project a certain image, it’s time to do the math. Without wanting to be doom and gloom, 2026 is a year to watch the pennies in a struggling economy. In an article published by Starling Bank, they explain how easy it is to lose sight of financial objectives “Lifestyle creep can easily turn into overspending or even a complete financial self-sabotage if we take it too far.
When it comes to lifestyle creep, awareness is everything. How much disposable income do you really have after your bills have been paid and you’ve factored in food shops? Can you afford to say ‘yes’
as much as you do? Have the things that used to be ‘treats’ become ‘essentials’? When you think about saying ‘no’ to an event or invitation, what are the feelings that come up?
Whatever they are - fear, shame, anxiety, relief - reality check them. If you’re afraid of saying ‘no’ because you think people will like you less or no longer include you, step back and rationalise. Will your friends really like you less if you don’t go to every event?
Remember: If you pair your ‘no’ with honesty, that honesty should build the relationship with whoever has invited you – not ruin it.”
Your salary is hard-earned, you deserve to have fun and make the occasional impulse purchase but when you’re spending more than you earn it is time to question why and how to deal with it.The obvious answer to avoiding lifestyle creep is to curb your spending and set some hard limits.There are plenty of budgeting apps available online so you can monitor where you are spending and try cut back on those non-essential items. It may feel liberating to say no to expensive social events, you may also be freeing friends and family who feel obliged to attend too. There should be a sense of satisfaction as you start to reduce your debt or increase your savings - it doesn’t mean your life is boring as you can still enjoy less lavish social events and shopping but within budget. Enjoy the sense of satisfaction as you take back control and say goodbye to lifestyle creep.
CREEP
LIFESTYLE