Want to know something interesting? Did you know that in 2018, the average American spent just about 50% of their household income on home/rent and car(s) payments?
Seriously… that blows my mind.
You can check out the official Department of Labor statistics if you want, but I already went ahead and did the homework for you, and turned it into a pie chart in excel. 🧙♂️
But how did we get here? How did we use to be able to live on so little when we were younger, and then when we make six figures, we’re still barely scraping by?
I’ll tell you how. Lifestyle creep.
Bottom Line Up Front
Lifestyle creep is normal. It is rampant, but why? It is keeping us poor! What is lifestyle creep and how can we reverse lifestyle creep?
In this article, I explain what lifestyle creep is, and then explain how and why it is so normal and rampant. I have also included a five-step method to easily reverse lifestyle creep.
What is lifestyle creep?
Lifestyle creep was the name of the Michael Jackson album released right after Thriller surprisingly… I’m totally kidding.
All joking aside, lifestyle creep, also known as lifestyle inflation, is a serious thing but all it really means is that you end up spending increasingly more of the surplus money that you make over time. So, as you get pay raises, you end up spending more money because you got a raise. Internally, you think to yourself, “Now that I’m making $500 more a month, I deserve that sports car, or now we can afford that bigger house.”
And it is more than just houses and cars. Lifestyle creep pertains to most anything that we spend money on. Vacations can become more lavish. You start taking your kids to a private school. You start eating out more often. You start grocery shopping at Trader Joe’s instead of Aldi. The list could go on and on.
How does it happen?
The answer to this question might not be so obvious because it isn’t a matter of how, but more a matter of why.
Here’s the obvious answer to how it happens. Lifestyle creep happens because we make more money and then we spend more money.
Here’s the not-so-obvious answer on why it happens.
Lifestyle creep is a natural yet distorted byproduct of unrestrained human sensory exposure to marketing and media, largely due to the ignorance of the consumer and purposeful intent of the producer.
Okay, let’s unpack that one.
Before I break that complicated statement down, I would just like to preface it by stating that I know there will be some nay-sayers due to differing worldviews. But hey, you can always leave me a comment down below of what you think… I mean, I just articulated my thoughts into that statement as I was writing this out and I would love to hear your thoughts on it.
Nevertheless, hold on to your britches, Allons-y.
[lifestyle creep is natural] – This portion of the statement assumes that there does exist natural conditions of human nature. Put simply, lifestyle creep exists because it is completely natural. As part of Animalia, we are built with a natural condition for survival. Moreover, humans possess a hierarchy of needs. This is known as Maslow’s Hierarchy of Needs and you can read about it in this article that discusses status purchasing.
[distorted byproduct] – We need to understand that seeking status in the fourth level of Maslow’s Hierarchy of Needs that status is important but not synonymous with status symbols or status purchases. Even if they are connected, we need to use a lens of seeing reality as it is and not allow our perception to become skewed or distorted… but why and how does it become distorted?
[unrestrained human sensory exposure to marketing and media] – Visualization is a real and powerful thing. This article at Simple Tiny Shifts discusses the power of visualization, how it is related to the Law of Attraction, and some quick tips to help visualize. Typically, visualization or using the Law of Attraction is used in a way to produce positive results in our lives, enabling us to be more successful and achieve our goals. But we need to remember that the Law of Attraction and visualization can work both ways. Marketing is designed to specifically find us, target us, and inundate our senses with their product or service. Additionally, media bombards us (or we bombard ourselves with media) and because of the Law of Attraction, we become what we see on television, chasing after bigger homes, better cars, fancier vacations, and so on.
[largely due to the ignorance of the consumer] – I think it is safe to say that most of us would defend the fact that we possess multiple TVs and smartphones and we’re completely justified in having them. I’m not saying that there is anything wrong with that. What I am saying though is that the first step toward change is awareness. We need to become aware that we possess a double-edged sword called visualization and it is an enormously powerful tool. Once we are no longer ignorant of that fact, we can start to use it for our benefit. We can learn to stop saturating our eyes and ears with a constant barrage of marketing and media. Not only that, we can choose to consciously shed off the effect of marketing and media, understanding that it is largely a ruse. It’s Hollywood.
[purposeful intent of the producer] – Marketers know what they’re doing. It is a science. There are graduate degrees in Universities everywhere for it. So yes, understanding the human psyche and how it can be exploited for financial gain is no accident. Listen to the second part of this NPR Throughline podcast episode about how General Motors started selling cars with frivolous things and putting next year’s catalog in the glove compartment, making buyers want the next year model as soon as they bought that year’s model.
Shut Up Already. Why does it matter to me?
Of course, lifestyle creep matters! It matters because of the same reason that everybody is trying to earn raises, make more passive income, and ultimately achieve an increase in status.
But it matters because if we can fine-tune our spending, we can achieve more status or “esteem”, on Maslow’s Hierarchy of Needs. More importantly, though, we can make better headway on achieving the pinnacle hierarchy, which is self-actualization.
The key to fine-tuning our spending in order to achieve better status at the esteem level is understanding that we need to cut sling load (military jargon for drop or get rid of) on all of those spending habits and possessions that we thought brought us esteem but actually don’t.
Additionally, we need to maximize our spending to produce esteem. So, if we think that it will be by spending $80,000 on a luxury car, that might get some people to think we are fancy and well-to-do. But what about in three or four years, when the car is only worth a third or half of the original value? That’s a high price to pay for a few years of “return on esteem”.
But undoing the lifestyle creep is hard!
It sure is. But there’s hope!
Start with my article if you missed it on seven simple ways to save over $10,000 a year. This should get you started as ways to simply reduce spending without imposing a large effect on lifestyle.
How to EASILY reverse lifestyle creep
Remember, the keyword here is "easily". Reversing lifestyle creep isn’t complicated, but it sure isn’t easy. It isn’t easy because the lies are heavy and lavish things sure are comfortable.
But without further ado, here is my simple guide to making reversing lifestyle creep a lot easier and more manageable.
Step 1: Make a list
First off, it is powerful to write things down.
The power of writing things down is described in books like Miracle Morning Millionaires or Goals! So, physically write down a list of things that you have identified that you can cut out or reduce in your life. You can just take a normal lined piece of paper and just start jotting down your list.
Note: The method that you want to write down your list of things to cut out or reduce is to write them out in their end state, or where you want to be. Write it as a matter of fact.
Bad Example: Stop going out to a restaurant five times a week.
Good Example: I eat out at a restaurant once a week.
Do you see the subtle difference? The point here is, the Law of Attraction or visualization takes over, just as it does with the effects of marketing and media as I spoke of earlier in this article. Your subconscious mind reads and understands the written “facts”, but your conscious mind knows that what is written isn’t actually true yet, but now, the brain starts to churn and work, causing our bodies to take action in order to remove that cognitive dissonance, aligning the subconscious with the conscious mind.
Step 2: Place them in order
Once you have listed everything out, you need to put them in order. There are three considerations of how to order them that you should balance between.
1. Put them in order from easiest to most difficult to implement.
2. Put them in order of most willing to give up to least willing to give up.
3. This third one will probably change as you start to self-actualize (the pinnacle of Maslow’s Hierarchy of Needs), identify what brings you the lowest to the highest “return on esteem”.
You’ve got to strike a balance between all three of these because the thing you might be most willing to give up, like a crazy big house that you pay way too much every month for is not the easiest thing to reduce or cut out. You can’t just return it to Wal-Mart…
Step 3: Start from the top
Begin your lifestyle creep reversal by cutting out or reducing on those easiest items that you are most willing to give up.
Take it as slow as you need to. If you can only knock out the first one, then so be it. Just cut out whatever that luxury is.
Step 4: Give it time
Once the effects of cutting out those first items (or that first item) start to fade, it is time to start gearing up for the next item or two on the list.
It turns out it takes 66 days to form a new habit, not the 21 days we always thought it was…
Nonetheless, if it takes over two months for your lifestyle to feel like it has normalized out, that is your queue to send a couple more items to the chopping block.
Step 5: Rinse and repeat
Just keep knocking them out when you are comfortable.
Also, you should periodically update, modify, or add to the list of things that you can cut out. It is completely understandable if at the beginning you felt like there was only a handful of things you could cut out, but with most things, it becomes obvious once you get started.
Final Word
I hope I have made it obvious as to the importance of understanding and reversing lifestyle creep. From a macroeconomic perspective though, it is irresponsible not to reduce our lifestyle creep. In fact, I would argue that it is hypocritical and paradoxical to lobby for higher taxation of the extremely wealthy while also succumbing to lifestyle creep or inflation…
But that’s for a future article on which I’ll discuss my opinion on the widening gap between the rich and poor.
v/r
The Woke Hack
"Never say anything about yourself you do not want to come true." - Brian Tracy
Time to Pay it Forward
Comment down below about your thoughts. Let me know what you think or if you have personally been able to reverse some lifestyle creep in your own life.
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Thank you for this article, the general explanations, the macro, is what I'm specifically seeking. There is a much easier way to stop it, of course, which is stop being exposed to marketing, by giving up on social media, television and so on.
Solid article, Brother. Stop wasting your money to impress people you don’t even like! 😂 I believe Will Smith said that. So true though. Wealth isn’t built with big houses or fancy cars. It it built through frugal living and smart investing.