The More Money We Earn, the More We Waste: How to Overcome Lifestyle Creep

There ought to be a time limit on celebrating good fortune.

Of all the financial habits I've had to break in my life, lifestyle creep may be the toughest. And though I'd like to say it sneaks up on me, that would be a lie. I know the right thing to do with money when I'm feeling flush, but I have (in the past) momentarily lost my financial mind.

What is lifestyle creep?

According to NPR, lifestyle creep is also referred to as "lifestyle inflation," and it happens when we have access to more money.

Have you ever gotten a new job at a higher salary and felt like you were swimming in money? Maybe you inherited some money or sold property that left you with more in your bank account than you're accustomed to.

Wherever it comes from, extra money to take care of necessities is good. When it becomes a problem is when our lifestyle balloons up and gobbles our funds, leaving us in the same boat we were in before our bank accounts grew.

It can be sneaky

Here are some of the ways lifestyle creep snakes its way into your life:

• You spend more time thinking of ways to spend your money. That may mean shopping online, imagining your house with all-new furnishings, planning a luxe vacation, or buying a tuxedo for your eight-pound dog.
• You never balance your bank account, figuring that you'll notice if there's a problem.
• The new house, vehicle, or boat you buy eats up a good portion of your savings, leaving you to wonder how quickly you can pay yourself back.
• You're overly generous, throwing money at people because having it feels so darn good.

If you've ever imagined having more money and promised yourself that you would use those funds to save, invest, or go back to school, yet you end up spending that money on unimportant purchases, that's lifestyle creep.

Why sweat it?

You may wonder why anyone would want to overcome lifestyle creep. After all, shouldn't we enjoy the fruits of our labor? To be clear, I'm not saying it's wrong to reward yourself. I'm just suggesting that none of us become hedonists, constantly chasing that thing that will bring us happiness.

Countless decades of research evolved into a theory called the "hedonic treadmill." The hedonic treadmill teaches us that no matter how great we feel after acquiring or experiencing something new, we go back to our baseline of happiness.

Think of the last time you bought a new car, moved into a great house, got a promotion at work, or came into a large sum of money. Studies show that each of these experiences likely gave you a boost of happiness, but that boost wasn't as intense as you thought it would be or didn't last as long as you'd imagined. It didn't take long to get back to your baseline.

Research shows that buying ourselves something new may give us pleasure initially. However, we typically return to how we felt before that new thing started gathering dust in our home or garage. Unfortunately, we then decide that something new will make us happy, and the vicious cycle starts all over again.

It's all about science

Ultimately, I realized that I would not be happy unless I got smart with our finances. Something odd happened along the way, though. I became addicted to the feeling I get when I'm doing the right thing with money. As far-fetched as that sounds, there's science behind it.

According to science, our brains release dopamine when we feel pleasure. At one time, that rush I'd get when I bought something new triggered a small flood of dopamine. Once it dried up, I would buy something else.

Once I decided to buckle down and make money work for me, things slowly shifted. The more I focused on saving and investing, the better I felt. After a while, I realized that I get that same rush when I transfer money to savings or make a weekly deposit in my Solo 401(k) as I got spending. I do realize that I traded one addiction for another, but this one does not leave me with regret.

Getting past lifestyle creep

If feeling crummy is not the thing that helps you get past lifestyle creep, these suggestions may help:

• Rather than imagine what you'll buy, consider the good you can do with discretionary funds. Prepare for retirement, help your kids through school, or donate to causes that mean something to you.
• If you're thinking of buying a fancy new car or house, be honest with yourself. Are you buying it because you feel it's expected? Is there anyone you're trying to impress? Understanding your motivation is a great way to make more mindful purchases.
• Do a gut check to ensure you're not allowing emotions to drive your purchases. No purchase will make you feel better if you buy things because you're sad, lonely, jealous, or insecure.
• Edit your life. Another thing that has helped me tremendously is moving. Each time we move, I edit our home, from basement to attic. I donate or toss anything we don't absolutely need. Decluttering illustrates how little happiness you experience when surrounded by all the "stuff" that once seemed important.

It's natural to want to celebrate when there's suddenly more money in the bank. Still, if lifestyle creep is draining those funds without making you truly happy, it's time to nip it in the bud.