Written by Alex Seleznev, MBA, CFP®, CFA and Alyssa Neece | Dec 24, 2025
When Alyssa and I first agreed to write a newsletter about “lifestyle creep,” I wanted to mostly focus on how it impacts your retirement.
As we started on the first draft, I realized it’s much more than that.
In fact, the issue we are about to discuss can severely impact not only your happiness in retirement, but your entire lifestyle.
It’s one of those pesky things that will kill your progress toward your life goals slowly but surely.
So, I suggest you keep reading even if eventual retirement is not your immediate priority.
To get us started, what is lifestyle creep and why does it impact so many people?
The “Creep”
Spending more as you earn more isn’t a moral failure.
It’s a natural response to having more resources.
As those of you who’ve been working with me for a while know, I’m certainly not promoting perpetual deprivation.
I strongly believe that life needs to be enjoyed in the present moment too!
But if your savings rate is the same as it was when you were working your first job, that needs to be tweaked.
As a simple example, let’s say that at your first job you took home $5,000 per paycheck.
Perhaps you did the math and knew that realistically you couldn’t save more than 5% of your paycheck.
But you wanted to start with something, so you made that 5% automatically deposit into your savings or brokerage account every month.
Then a year later, you get a big raise, and you feel so relieved to have an extra $1,000 per paycheck.
You think to yourself of all the wonderful things you can do with the extra money…
But it never crosses your mind to increase your savings rate.
Now, fast forward to your mid-50s, and you eventually realize that you are not only unprepared for the next chapter of your life.
You also realize that if you ever lose your high-paying job, you are not going to have enough assets to support yourself for any meaningful length of time.
You are locked in a position that you may not like that much, but you can’t escape because you need the money (I’m sure you’ve heard of the “rat race” analogy).
So now you know what lifestyle creep is all about.
It sneaks up on you!
So what do you do about it?
I really like the idea of “Paying Yourself First.” You can click on this link to check it out if you are interested.
You’ve probably heard me mention it before.
Determine how much you need to save each month and save it automatically before anything else is accounted for.
Then the remainder is there for you to spend freely on your needs and wants.
But here’s the important part.
Every time you get a raise or a bonus, consider the following simple strategy:
Set aside 1/3 for taxes or withholdings.
Increase your savings by 1/3 of the raise or bonus.
Spend the remaining 1/3 however you wish.
There are, of course, other strategies that require more thought than this rule of thumb.
I do believe this simple approach will go a long way toward preventing you from falling victim to lifestyle creep.
Why is this important to you?
As I mentioned earlier, the goal is not just to save for your eventual retirement.
You want to be in a position where you are in charge of your finances, lifestyle and career choices.
Unfortunately, lifestyle creep, if not recognized and addressed, can impact all of these important parts of your life.
What you need is a plan that allows you to enjoy the fruits of your labor now and sustainably grow your finances for the future.
And with that, I very much hope you’re enjoying this holiday season!
Happy Holidays!