Lifestyle Creep - Beware!
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Let’s face it, we all buy that hot coffee from the trendy café around the corner because it tastes so much better than the pod machine at work and it saves time & effort and better still it’s only $4 per cup. All positives, right? Wrong! You just paid for that deliciously hot convenient coffee that 5 years or so ago you would have made at work or home and saved the money.
This is just one example of how lifestyles have changed over time and how it’s become “the norm”.
Beware of Lifestyle creep. It’s out there and it may affect you or someone you know!
Lifestyle creep is a situation where people’s lifestyle or standard of living improves as their income rises either through an increase of income or decrease in costs. As lifestyle creep occurs and more money is spent on lifestyle, former luxuries become necessities. This can become an issue when it takes the form of living beyond your means.
As Accountants we see & hear it all the time:
It’s getting harder to manage finances
Businesses are finding it difficult to keep up with all the red tape
Government Agencies are cracking down and want their money
Customers aren’t paying within trading terms which has a domino effect
It may be time for you to assess your affairs so that you don’t become a victim of lifestyle creep.
Cut down on life’s luxuries…..make that coffee at home or work
Save the money you’d normally spend on eating out and use it to reduce debt
Put off that holiday you want so badly until you can afford it. Better still invest that money!
Think about paying down loans or pay off that ATO debt. You could save a bucket load of interest!
Live within your means…maintaining an image (i.e. latest car, phone, etc) could have a detrimental effect on your finances