Life Kit
How to avoid 'lifestyle creep'
Jul 14, 2022
Paco de Leon, author of "Finance for the People," brings valuable insights into the phenomenon of lifestyle creep, where increased income leads to unrecognized spending hikes. He discusses practical strategies for maintaining financial goals amidst societal pressures, encouraging listeners to define their own paths rather than conforming to peer comparisons. The episode promotes mindful spending through techniques like creating a 'buy list' to resist impulse purchases, ultimately helping individuals align their finances with personal values and emotional well-being.
22:23
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Quick takeaways
- Lifestyle creep occurs when people's expenses match their income without much saving or investing, often due to factors like COVID-19 and inflation.
- Housing costs, such as rent, and smaller discretionary purchases contribute to lifestyle creep, and creating a budget and buy list can help minimize it.
Deep dives
Understanding Lifestyle Creep
Lifestyle creep refers to the phenomenon where as people earn more money, they tend to spend more money. It often goes unnoticed until suddenly the credit card bill exceeds expectations. This is more likely to happen when people have a larger budget and don't scrutinize their expenses as closely. Factors like COVID-19, moving to a new apartment, and inflation contribute to lifestyle creep, where expenses match income without much saving or investing.
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