Lifestyle creep: The hidden drain on your savings
Written and accurate as at: Mar 12, 2026 Current Stats & Facts
Getting a pay rise or bonus feels great, and for many of us our first instinct is to celebrate. Maybe you buy a new phone, update your wardrobe, or start ordering takeout a few more times each month.
Making a conscious decision to raise your standard of living is normal – after all, what’s the use in making more money if you can’t enjoy it? But if you find you’re saving less despite the higher pay, you could be experiencing lifestyle creep.
As the name suggests, lifestyle creep usually doesn’t happen all at once. It often starts with a few little indulgences and gradually gets out of hand, until one day you realise yesterday’s luxuries have become today’s must-haves. Fortunately, it is possible to rein it in while still allowing yourself some guilt-free spending.
Put your extra earnings out of reach
You’ve probably heard of the pay-yourself-first system. It involves transferring a portion of your pay to your savings the minute it hits your account. The idea is to treat the amount you save like a fixed line item in your budget, so you’re only allowed to spend what’s left over.
This strategy can be a great way to fend off lifestyle creep. Say your pay goes up $500 per month – if you can transfer $300 of that into a high-interest savings account, you’ll still get an extra $200 to enjoy now. Meanwhile the bulk of your pay rise will be working hard for you in a less accessible location.
Review your long-term goals
There’s never a bad time to review your long-term plans, but it’s especially important if your savings aren’t rising in line with your income. Keeping your goals front of mind can make it easier to say no to the unnecessary upgrades that a higher salary might afford.
For example, if you’re saving up a home deposit but also eyeing a brand new car, ask yourself whether the satisfaction you’d gain from driving the latest model is worth an extra year of renting. You might decide that a more modest car – or even sticking with your current ride – is the more sensible choice.
Know where your money is going
Not all spending increases are a sign you’re being indulgent – sometimes it’s just inflation at work. Higher rent, grocery prices and energy bills can all push up your outgoings without any change in your behaviour.
If you’re in the dark about where your money is going, tracking your spending can help. Using a budgeting app, spreadsheet or even just a notebook, try jotting down your expenses for a month to get some insights.
From there, you can decide what the best way forward looks like. If you’re simply spending more because of rising prices, you can try looking for better deals. If lifestyle creep is the culprit, here are a few more strategies you can introduce.
- Setting weekly or monthly spending limits to keep discretionary spending in check
- Try to maintain or grow the percentage of your income you’re putting away
Committing to waiting 24 hours before making non-essential purchases - Tying lifestyle upgrades to milestones, such as paying off debt or reaching a specific savings target
- Taking a break from social media so you’re not tempted by targeted ads or the latest fads
- Pausing before buying something new and asking yourself whether you really need it.
Of course, everyone’s goals and priorities will be different, and while it’s smart to save and invest for the future, that doesn’t mean you can’t treat yourself along the way. You’ll just need to be mindful that living well now doesn’t come at the expense of your long-term financial goals.