Get Rich Slowly

Detecting and Preventing Lifestyle Creep

This is a guest post from freelance writer Jessica Ward.

For three years, I’ve been patting myself on the back. The household expenses remain the same every month, and we’re getting out of debt. In spite of increases in costs, we’ve found efficiencies and made room. But, as they say, after pride comes the fall. I discovered this month that we’re actually making less progress every month now than when we first started making monthly budgets!

Initially I thought this was a short-term trend, but when I looked back a little farther in the old budgets file, I discovered that we’ve really been on this path since day one. We have succumbed to “lifestyle creep.” Subtle upticks in our family’s expenses that don’t necessarily fall into line with real costs of living.

Slowly and stealthily, our lifestyle has edged back up. An extra meal out here, a technology upgrade there, all unnoticed because we haven’t spent beyond our planned expense cap, but unchecked because we didn’t notice that we had slowed progress towards our goals.

Identifying your budget “creepers”
We use a zero-based budget. Money in equals money out, every month. Sure it might go “out” into a savings account or towards debt, but the checking account ideally zeros out every month. I neglected the second step of allocating everything. By way of example, here are some expenses that crept up on us this year, virtually unnoticed:

  1. Family gym membership, $1,200 year. (We did elect to keep it for 2012, but are making other cuts to accommodate.)
  2. Data plan on my husband’s phone (he doesn’t even know how to text). We cut this in July, but not after spending $240 for the year on unnecessary data charges.
  3. A digital camera upgrade (rationalized with the old “it’s a business write-off” excuse) at $400.
  4. An average of $200 per month additional eating out expenses, or $2,400.
  5. An average of an additional $200 per month in charitable expenses, or $2,400 a year.

All told, we experienced an increase in lifestyle (and decrease in goal progress) of nearly $7,000. Had we minded our budget better, we’d be out of debt by now. That’s embarrassing.

Other people will have other areas of budget creep. Fancy coffee, storage unit, unnecessary gadget upgrades. Little upgrades like premium cable can be adding hundreds to your household expenses every year.

How to creep-proof your budget
If you’re feeling the budget creep, take the following steps to get back on track.

Please, tell me I’m not alone in this budget faux pas? Has your budget suffered from creep?