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Lifestyle creep happens every day to millions of people. So what is it, and when can it happen?

Lifestyle creep happens when your income increases - whether from a promotion, a raise or bonus, or a new job that pays more - and your spending habits become more expensive as a result. Instead of sticking to the budget you created based on your old income, you start spending more on things like eating out four to five times a week instead of one to two times. You begin buying nicer clothes, cars, and furniture, and just overall upgrading your style.

Don't get me wrong - everyone deserves to have nice things, but at what point is it too much? Instead of buying that new $100 pair of Lululemon leggings you just had to have - even though you already have five other pairs at home - you could've invested that money into your savings, Roth IRA, stocks, etc. Just because you're making more money doesn't mean you're automatically saving more; you have to use critical thinking skills.

A personal story

When I got my first paycheck, I was so excited, and my first thoughts were: What can I spend it on? What tangible object can I buy? Well, from firsthand experience, I bought a long jean skirt for $34 off Amazon - without thinking it through, without pausing to ask myself: Am I going to wear this all the time? Will I still have or want this in five years? Am I just buying it because of a trend going around?

Two years later, I had worn it maybe three times, and I donated it last month. Now you might be thinking, "Oh, it was just $34." But that money could've gone into a stock or into savings and been allowed to grow.

Five ways to avoid it

Now, how does someone avoid lifestyle creep? Here are five tips:

Budget, Budget, Budget. I've said it before, and you will continue to hear it: budgeting is one of the best things you can do for yourself and your future. You can use anything to help you budget - a spreadsheet (Excel or Google Sheets), or an app. Some of the top ones are Monarch (currently offering 50% off your first year with code FORBES50, so do with that information what you will) and Empower, which is free.

Disclaimer: none of this is sponsored. These are apps I personally researched and believe could genuinely be helpful - not a paid partnership.

Sit Down and Write Goals for Yourself. Where do you want to live in five years? A house? An apartment? Do you see yourself having kids in five to ten years? These goals could be long-term or short-term - they could literally be on a sticky note or in a Google Doc. Whatever it is that helps you succeed in making those goals happen.

Have a Strong Mindset. It can be very difficult not to fall into whatever the new trend is, or the mindset that everything you own needs to have a fancy logo so people think you're rich and exciting. But you have to remember that they might look more financially stable than you are - that's not always true. In 10, 20, or 30 years from now, they could still be paying off student loans, a mortgage, or credit card debt, while you could be debt-free and traveling the world with the money you saved.

Avoid Impulse Purchases. This could be a range of things - a Black Friday sale, Prime Day deals. I know you know, and yes, there are some good deals. But if you're just browsing and you find a deal on something you've never needed or even thought of before, that's an unnecessary impulse purchase.

Treat Yourself! It's okay to treat yourself - it can even be good for you. But know there's a limit, and you need to set it for yourself. It doesn't need to be a "big" purchase. It could be getting another TV subscription, updating your wardrobe a bit, or buying supplies for a new hobby you've been wanting to try.

At the end of the day, lifestyle creep isn't about never being able to treat yourself or living like you're still on a college budget. The main thing is to keep yourself aware and stay intentional as your income increases.

So the next time your income increases, take control of the choice before the choice makes itself.

A quick note: nothing in this post is sponsored. Everything shared here - apps, tips, opinions - comes from my own research and experience, not a paid partnership.

Sources & further reading