Lifestyle Creep and why I do these three things first

I can remember standing outside the shop door talking with the president of the company. I didn’t report directly to him because he was now overseeing a different part of the business. But from time to time I would join him and the lead engineer outside and talk to them while they got their nicotine fix (smoked). There were only four of us that worked in the building.

I think I was about 19. Not far removed from high school for the most part and about mid way through my associates degree in electronics. My technical title was electronics mechanic. My job was to fix the electronic safes that the company sold. The president and lead engineer were the founders of the company and had sold it to a bigger company, but they were primarily focused on developing new products.

I had many conversations with the president. He was obviously a very smart guy that had built a business that was bought by a much larger business. I doubt he had money problems, but as I have learned in my 43 years on this earth, you can never assume anything about anybody.

I might have been making $10.50 an hour in this position. Which at that time was very good. It was so good that I can remember telling my mammaw how much I was making and she told me that it was more an hour than my pappaw and ever made during his career in the union job he had. Now this was around 1998-1999 and my pappaw had retired some time in the mid to late eighties. But it definitely gives some perspective.

As I am talking with the president that day. We were talking about money, career and things. I am not sure exactly what led us to he conversation, but I remember what he said exactly to this day and I have never forgotten it.

He said “Brian, I can give you a salary tomorrow of $50,000 dollars and within six months you will be living your life according to that salary!” He said “Your lifestyle will increase to where that amount of money is no different than what you are making now, you just might have different things.”

My young naive self said “No way, I would do this or that with the money and I would save a lot more of it.”

Anyway, I learned that lesson that day. I still remember it. I would be a liar if I didn’t admit that there has been a little lifestyle creep at different times in my life. However, for the most part I have always lived in a way where I didn’t spend everything I made.

For most of my life I have tried to live within my means. The phenomenon of “lifestyle creep” is real. It is described like this:

Lifestyle creep happens when increased income leads to increased discretionary spending.

I have to say that I don’t do without, but I am not a freak about it. Like, don’t eat out. Don’t spend money on coffee. Don’t buy nice things. I actually do a lot of all three of these things. But I only do it after I have done these three things first.

  1. Bills are paid
  2. Invest
  3. Save

These three things are in order for a reason.

Make sure your bills are paid. And if you can’t afford to do number 2. Eliminate and decrease some of your bills and figure out a way to earn more income.

Investing is the most important thing you can do. Putting money into something that provides you a return. That return can be today or at a later date.

Saving is last, but once you hit a certain threshold. You should invest more of that money than you save.

Look, lifestyle creep can happen to us all. The key is to be aware of it and manage it accordingly.

To your success and your future.

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