Spending creep is a phenomenon that occurs when we increase our spending (consciously or subconsciously) as our perceived wealth grows. With every subsequent pay raise and/or run in the stock market, I’ve noticed spending creep settling into my budget.
Where I would once call my bank to challenge a $10 fee, I now let little things slide. If I buy something that I found cheaper elsewhere, I don’t bother to return it for the difference. I notice myself paying for meals and drinks out with friends. I buy more luxury goods (wallets, purses, shoes, etc.) than I ever have before. I also buy more expensive gifts for birthday and graduation parties than I normally did in the past.
These were things that were inconceivable to me just a few years ago, but this sort of spending creep can wreak havoc on long-term financial planning.
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Spending creep can happen to just about anyone. Just look at celebrities who came from nothing, then came across a ton of money, increased their lifestyles to match, and ended up broke. Spending creep is real and should be reined in before it causes any major damage to your financial plans.
For us non-celebrities, spending creep happens far too easily. Maybe you order food delivery a few times a week for the convenience, or maybe you buy that extra album on iTunes. Some of these purchases are conscious, but many times, they’re not.
Here’s how to creep-proof your budget:
Track Your Spending
I have all my credit card and mortgagee accounts consolidated online, and I monitor them frequently. If you notice spending creep, adjust some things to make sure you can get back on track.
Set Your Budget
When making a budget, include all your expenses and prioritize them. You should be realistic about your spending/saving goals and track them frequently.
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Revise Your Budget Based On Spending Creep
If you notice spending creep and you decide that you want to continue that spending in the long-term, be sure to balance it out by reducing your spending in other areas and/or increasing your income. It’s important to try and maintain a level of consistency in your budget.
Maintain Your Diligence About Being Thrifty
Have you scaled down your efforts at coupon clipping, looking for sales, buying used, bargaining, or trading? Have you even stopped price-comparing? A few dollars saved here and there can really add up. As a consumer, you can avoid wasting money by challenging unnecessary costs.
Rein In Old Habits
Do you find yourself buying more extravagant gifts, eating out often, picking up the tab frequently, or going on extra weekend getaways? Keep a wary eye out for these old habits that can break your budget.
There’s nothing wrong with enjoying your money, especially if you’ve worked hard to earn more of it. However, in my opinion, this type of spending creep should be temporary and used to satisfy a certain urge. Immediately following that gratification, you should return to your budget plan. So, enjoy those pay raises, but watch out for spending creep.