From Pay Raise to Paycheck 

When you start earning more money because of a better job or a pay raise, it's easy to spend more too. This is referred to as the "lifestyle creep." But it's not just a story, but you can control it.

What's Lifestyle Creep?

Imagine getting more money in your paycheck because you have a better job or got a raise. It's tempting to spend it on more things you like. That's lifestyle creep. But you can be smarter about it.

Three Ways to Deal with Lifestyle Creep

Save More: You could save all the extra money you get. If you were living well on $70,000 a year and now make $80,000, keep living like you earn $70,000. Save the extra $10,000 for your future.

Split It: You could divide the extra money. Allocate a portion of it to savings and spend what's left. If you now earn an additional $10,000/yr, save $5,000 and spend $5,000. Choose how much to save and how much to spend based on your own financial goals and personal values.

Wing It: Some people don't plan for lifestyle creep. They spend all the extra money. But they might end up earning a lot but still struggling with bills.

My Story and What You Can Do

I belonged the "Wing It" group for a long time. However, after the birth of my first child, I realized I needed to be in the "Save More" group. Or at the very least, the “split it” group. 

Whether you choose to save it all or split it, the key is to have a plan. Set up your bank account to save some of your extra money automatically. You can also ask your job to allocate part of your pay in a savings account using an "allotment". When you save money first, it's easier to reach your goals.

The Most Important Thing

If you're living paycheck to paycheck because you don't make enough, that's not be be shamed. You're not in danger of lifestyle creep. But it's not a spending problem; it's an income problem.

In short, lifestyle creep isn't a bad thing. It can be controlled. Whether you choose to save it all or split it, have a plan to save some of your extra money. And remember, if you're struggling because you don't make enough, it's not your fault, and lifestyle creep isn't your problem.