After a raise, watch out for lifestyle creep eating into potential savings
BNN Bloomberg
Fears of overspending creep in with rising salaries.
In her new role, the 26-year-old Torontonian has managed to get a $40,000 a year pay bump, but Cruz still worries about overspending as her lifestyle potentially creeps up with her salary, especially with inflation running so hot.
“I feel like a lot of my friends and people I hang out with are in a similar place in life. All do well for themselves so sometimes there’s a feeling of trying to keep up with them, and it can get expensive,” she said.
Cindy Marques, co-founder and CEO of MakeCents, a financial coaching company for millennials, said she often sees lifestyle creep — a phenomenon where discretionary spending on non-essential items seems to increase alongside someone’s pay — with clients that are caught up in a paycheque-to-paycheque cycle. Even after getting a raise or new job with higher pay, they remain stuck living paycheque-to-paycheque.
