Each week across the ACM network Ali and Gaby Rosenberg offer quick tips for big wins in understanding your money. The sisters are co-founders of the Blossom micro-investing app.
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![Exercising your superpower to overcome lifestyle creep. Exercising your superpower to overcome lifestyle creep.](/images/transform/v1/crop/frm/172575538/ca312f13-6123-439e-b379-4e0c2fc163a9.jpg/r0_0_1600_900_w1200_h678_fmax.jpg)
With the minimum salary in Australia getting a small but very welcome bump up in July, we're all hopeful it will create a positive ripple effect across the economy, or at least get us on the right road to tackle the impact of steep inflation.
But what happens if you do get a bump, but the increase doesn't seem to make much difference at all? Be wary of a popular phenomenon called lifestyle creep, because it can sneak up on you faster than Christmas.
Lifestyle creep happens when you (pretty much unconsciously) start spending more as your income increases. You start to see things you once considered luxuries as straight-up necessities - like dining out, getting food delivered, upgrading to the latest iPhone, or moving to a more expensive home. It often follows a raise or bonus, or if you've cut down expenses significantly, perhaps by paying off debt or downsizing living arrangements. When you've been doing it tough for a while, an improved financial situation can easily become the mindset of "I deserve this!" - and careful spending turns into casual indulgence.
Older generations can fall victim to lifestyle creep in the years pre-retirement. They may still be in their peak earning years, having paid off major expenses like mortgages or childcare costs, and suddenly they're into expensive cars, big holidays and luxury goods, instead of future financial stability. Young savers can also experience lifestyle creep when they land their first well-paying job, and struggle to prioritise bigger saving milestones.
So how do you avoid lifestyle creep, and use a boost in your financial situation to stay on track with your long-term goals?
1. Don't compare your lifestyle: Try to avoid looking around you or on social media to decide what you should be investing your money, time and energy into. You have your own personal goals and circumstances.
2. Budget first: When you get an increase in income, allocate a portion to savings and investments before adjusting your spending.
3. Focus on the big goals: Whether it's a big holiday, a house deposit or a relaxing retirement, having a clear goal in mind can keep you motivated.
4. An attitude of gratitude: Rather than chasing more (which is a never-ending pursuit), focus on what you've achieved with less money. Try to practice gratitude for what you have on a regular basis.
We all deserve a reward for our efforts - and a long-awaited improvement in circumstances should be celebrated! But also remember, discipline and the ability to stick to a strict budget is actually a superpower. If you've built those muscles over time (even if it's out of necessity) imagine what else you could do.
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Sisters Ali & Gaby Rosenberg are the co-founders of Blossom App.
- Nothing in this article should be construed as being personal financial advice. It is general in nature only and has not taken into account your particular circumstances, objectives, financial situation or needs. You should consider whether the information, strategies and investments are appropriate and suitable for you or seek personal advice from a licensed financial planner before making an investment decision. Past performance does not indicate future performance. BlossomApp Pty Ltd (ABN 74 644 216 151) is a C.A.R. (No. 001284228) of Gleneagle Asset Management Ltd (AFSL 226199). Consider the PDS and TMD at blossomapp.com to ensure the product suits your needs.
- ACM co-owner Alex Waislitz has a stake in a company that provides services to Blossom. ACM is the publisher of this masthead.