5 Ways I Tackle Wanting Nicer Things (Lifestyle Creep)

Friends That Invest

Host Sim discusses practical strategies for managing 'lifestyle creep' as income increases and life circumstances change, such as her upcomi

Key takeaways

Use separate bank accounts for short-term and long-term goals to make windfalls like tax refunds harder to spend impulsively.
Avoid 'echo chambers' of extremely wealthy individuals that can warp your perception of what constitutes a normal lifestyle.

Main topics

Lifestyle creep
Financial goal setting

Notable quotes

The first thought you have isn't always necessarily the thought you believe.

Conclusion

The episode provides actionable psychological and structural tools for

Transcript preview

Speaker 2 (0:00) Before we get back into today's episode, I want to thank today's sponsor, Fitnexa. One habit I've been trying to prioritize lately is protecting my evenings. We spend so much time talking about productive mornings, but the truth is good mornings usually start with a good night's sleep. That's why I wanted to share Fitnex's Somnipods 3. They're ultra light sleep earbuds designed specifically for overnight comfort. So they put less pressure on your ears than regular earbuds, especially if you're a side sleeper. With hybrid active noise cancellation, they help tune out the little distractions that can keep you awake, like snoring or street noise while you wind down with sleep sounds or your favorite podcast. Check them out through the link in our show notes for $10 off. automatically or use code FRIENDS10 at checkout. Speaker 2 (0:52) Hello and welcome to Friends That Invest. You're joined today by your host, Sim. I am a financial author and investor, and I'm here to help you learn about all things investing and personal finance. Now, as you can see, if you're watching this on YouTube or you have the video podcast option on, I'm in a little bit of a mess. And I think this is just going to be the reality of the next couple of episodes as I transition into New York. However, I'm very excited to talk to you today about a topic that I have been asked and also I have had on my mind which is the fear and the worry of lifestyle creep. Now if you are new to the concept, I don't think a lot of us are, but just for those that haven't heard, lifestyle creep is this idea that when you're younger you don't have as much money and so it's very easy to save and live like a student. It was so much easier for me to be like I love my Suzuki Swift when I literally could only afford a Suzuki Swift. But As the Investee Besties continue to grow older, I mean, some of you have been listening to the podcast for six years now. Life is slowly starting to change. We're starting to get older. We're starting to have pay rises. And it gets a little bit harder because you start meeting people that are in their 30s and their 40s who have much nicer lifestyles. And if you're like me and you're moving to an area where the lifestyle is a little bit more bougie, a little bit more expensive. How do you stick to keeping your lifestyle the way you've had it? How do you not fall into lifestyle creep? Where do you draw the line? And do you just like continue to be the frugal person? And everyone's like, wow, like Zim will just not quit it. So I'm going to explain all of that today in this episode. It's going to be fun. It's going to be enjoyable. And hopefully by the end of this episode, you'll be able to walk away with some actual. fundamental like tangible tips because there are four to five things that I do that I'm going to take with me into New York and hopefully you find them helpful as well whether it's like changing your workplace or moving into a place as well where things are a little bit more fancy and you're just trying to trying to keep to your financial goals. Now, step number one that I employ when it comes to making sure that I am not overspending and not allowing lifestyle creep to get in my own way is I have found it is so much easier to have a separate bank account for my short-term goals, a separate bank account for my long-term goals, and an investment account, obviously, which is not in my bank account, but it's like, you know, my online investing broker. And so let's say I like, for example, the other day I got a $9,000 tax refund because I overpaid my taxes. I'd honestly just rather overpay than underpay. That is my way of doing things. And I just, I'm so scared of tax guys. Like I just want to pay all of it and just not go to like tax jail. I just, I don't want to deal with any of that. So I paid my taxes. I overpaid. That's fine. Happens. I got $9,000 back. Now, $9,000 when you're moving is a lot of money that is like, I was going to say two months of rent in New York, but it's not even that anymore. It is a lot of money. And I was like, wow, I can use this money to like splurge on myself, buy something nice. Like I've been working hard. I deserve it. This is money that is like taxed back. So it's when I usually get like $9,000, usually I have to put. Some of it aside for tax and some of it aside for like paying bills and stuff. And there's not usually a lot of money left over for SIM, but to get $9,000 tax back, it was like, it was like candy. But I did the right thing. I did the smart thing. And I put the money into my long-term savings account because I'm trying to build up a one year cash buffer for living in New York, which is a lot of money. And so I put that money in, I left it there. And it is so much easier to not fall into lifestyle creep when you can't spend that money. It is so much harder to fall into lifestyle creep when if you get a pay rise or you get like a bonus and it goes into your main account, suddenly it's like that money is free for all. That money is just like waiting. The money is just kind of like laying on the couch sideways, like paint me like one of your French girls. That money is just like, come on, like I know you want to. I know you're interested and you have to just like not let it tempt you. And to say to that money, the only way I am going to not be tempted by you is to just. close my eyes and to put you in a completely different like environment and a different bank account where I cannot see you. And that way you don't even exist for me. And so that is how I have found that I am able to manage lifestyle creep. And when someone close to me is like, oh my God, Sim, like I just got a pay rise or for like one of my cousins, they're like, I got like a bonus. I'm like, amazing. Let's put it in a separate bank account. If this is like a, you know, an important time where you really want some of it, sure. Take like. 5 % out. You