Are You Making This Key Financial Mistake?
Market Meditations | March 6, 2021
When you receive a raise, what do you do with the extra cash? Do you celebrate? 🍾 Do you buy that new car? Do you start eating out more often?🍣
If so you could be making one of the easiest but biggest financial mistakes possible: Lifestyle Creep.
Lifestyle creep is a phenomenon that occurs as your income rises. Things you previously considered luxuries, you now consider as necessities. You think you NEED that daily coffee or those designer brands.👚
Whilst some lifestyle creep is ok, too much has the potential to completely derail your savings goals. If you consider an item a necessity you will consistently spend money on that item, even if you don’t need it.
To stop lifestyle creep in its tracks, try these tips: ✅
- Have a financial plan and know exactly how any extra income is going to be spent
- Treat yourself strategically. Earmark a specific amount of income for a “fun fund” and know that you can spend that without hampering your long term goals. 🏆
- Challenge your mindset. Audit your everyday purchases and for each item consider, do I really need this and does this actually contribute to my happiness?
- Be goal oriented. 🎯 Whether your goal is financial freedom or saving for a deposit – be conscious that each time you let lifestyle creep occur, you are pushing yourself away from your final goal.
