Lifestyle Creep: The Budget Enemy You Least Notice

Updated: June 21, 2023

There are many obstacles to achieving wealth. One that many don’t notice is Lifestyle Creep. Do you know what it is?

Lifestyle creep, or lifestyle inflation as it is also called, is what happens when your income increases and you start upgrading your lifestyle instead of doing proper money management first.

This is the worst enemy of your budget and one that many least notice. But how does lifestyle creep actually happen?


As an example, imagine an employee with a P20,000 monthly salary. After a year, he gets appraised, and his income goes up to P24,000 a month.

What’s the usual thing that happens next?

That person begins to adjust his lifestyle, improving it according to the extra money he’ll receive.

Thinking he now has an “extra P4,000” every month, he suddenly buys a new smartphone and decides to enroll in a gym. Then, his once-a-month movie night becomes once a week. Lastly, he starts eating out more often.

The end result?

The things that he formerly thought of as luxuries have slowly become “necessities.” He now “needs” to go to the gym to stay healthy. He “needs” a new smartphone because he uses it a lot for work. And so on…

And after several months, he begins to wonder why he can’t save any money despite having a bigger salary.

Sounds familiar?

It is because that’s exactly what lifestyle creep is, and we all experience it.

There’s really nothing wrong with wanting to improve our lifestyle, but the right way to do it is to be prudent about our budget and do proper money management.

How To Avoid Lifestyle Creep

You can start by realizing that the “extra P4,000” is actually just around P3,500 net of taxes. So if you want to improve your lifestyle, then you have to know exactly how much you’re now taking home. You’ll be surprised at how smaller it is than you think.

Second, go back to your personal finance basics and recreate your budget according to the new income you have.

More importantly, remember that when your income increases, then the portion that you set aside as savings should increase, too, along with the cash allocation that you may have for debt payments.

Lastly, and actually, the best solution against lifestyle creep – is not to let the extra income change how you live.

I can imagine the guy in our example being able to live comfortably at P20,000 a month gross income for the past year – so there’s no question that he can’t continue living that way.

So instead of upgrading his lifestyle, he can just use that “extra P4,000” a month to build his emergency fund if he doesn’t have one yet, or to spend it on buying investments.


Isn’t improving your lifestyle the point of making more money?

My answer to that is Yes and No.

“Yes” – we work hard so we can live better – and that means giving our long-term goals more priority over short-term pleasures.

We all have limited time as productive individuals. Someday, our skills and knowledge can become obsolete, and our bodies can no longer afford to work. And when that time comes, you have to make sure that you have other sources of income than yourself.

So, “No” – the money we get from our active income should not solely be used to improve our current lifestyle. But more importantly, it should be used to secure our future and create passive income sources.

So that when you retire, your lifestyle will be a happy and comfortable one. Take a stand against lifestyle creep today.

Photo credits: rwassell and kkanouse


  1. Just want to say “Thank You” to your efforts in posting these issues about financial education and management. It’s very applicable, clear , practical and helpful. I’ll try to do it.

  2. Wow, thanks for this inspiring and informative post, sir Fitz. Now I know what to call and how to fight this feeling that I get when I anticipate a pay raise.

    I really love the precision and clarity of your writing.

  3. Great post. this one, even though seemed to be a common knowledge to most people, is one thing that is difficult to avoid. Thanks! I’ll be sharing the link on my Facebook page. 🙂

    – Rogie

  4. A reminder I just needed, Sir. I was at the brink of committing the same financial mistakes (yes, a lifestyle creep) when I got news of a salary increase just a few days ago. Will definitely keep this added income in our emergency fund. Thank you for keeping us grounded through this post!

  5. I totally agree with you, Fitz. Actually, before reading this blog, I have already set my mind that any windfall (i.e., bonus, incentives, overtime pay) i will receive or if there is a salary increase, the additional income will definitely be set aside for additional savings and investments. I don’t need to tremendously change my current lifestyle because this is not appreciating my value, my net worth. I am only fooling myself thinking that buying luxuries now will make them think that I am rich. I am always excited whenever I am blessed with additional income because I know that this will add up to my net worth and I am really planning to be wealthy in the future by living simply today =) I am just glad that my thought was reinforced by your blog. Really, thanks Fitz. Keep it up!

  6. Ouch! That’s hurt. I was Totally like that BOY IN THE EXAMPLE before. After shall I say earning trice what I was earning before my lifestyle change. Like that BOY IN THE EXAMPLE, I also enrolled in the gym, buy new gadgets and eating outside. Then one day I woke up that what I was doing is totally wrong.

    Thank you for this another wonderful article.

    Keep it up Idol.


  7. thanks fitz for this wonderful post. this is an on time reminder for me. If walang proper budgetting, madali lng talaga mawala ang pera, at hirap i trackback kung saan mo nagastos. 😀

  8. This is very true. Lagi ko naiisip na yung mga malalaki kita, parang tulad lang din ng mga maliit ang kita. Example, those earning more, pag nagkape, sa mamahalin pa. Yung mga nagearn ng enough, dun lang sa pantry. Hahaha! I guess, natural sa tao yun. Pero sa huli lang nila nalalaman na wala rin pala sila naiipon.

    This is a good reminder for me na nagsisimula pa lang mag-ipon. 🙂

  9. Madalas pa sa atin, pag alam nilang tataas ang sweldo, iniisip na kung ano ang bibilin sa increase na makukuha.

    I remember what my mentor said nung review, “Don’t spend what you don’t earn yet.” 🙂

  10. Since I am can live with my current income level. If I would be given a salary increase, I would not revise my budget. Or if I really have to do it – I would put the increase in my savings/investment section. 🙂

  11. This is true! Now that I’m enlightened, I think I will follow your advice — increase addition to savings when salary increases.

  12. […] Yes! Time deposits, in general, are bad investments – because they don’t have the ability to make your money grow higher than inflation (which is around 6% in the Philippines, but it’s usually higher – depending on your lifestyle). […]

  13. […] Yes! Time deposits, in general, are bad investments – because they can’t make your money grow higher than inflation (which is around 6% in the Philippines, but it’s usually higher – depending on your lifestyle). […]

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