Lifestyle creep happens when a person’s standard and cost of living goes up at the same time or even before their income increases. This results to having the same or sometimes less money after all the expenses even if there’s a raise in a persons salary or income.
If you are getting raises in your salary or when you start receiving dividends from your investments, my advice is to maintain your lifestyle and expenses as much as possible. Of course, you can’t avoid increases in the price of goods and services but if your salary raises only covers it then you don’t really have an increase, it’s just keeping up with inflation.
It takes discipline and patience to maintain your current lifestyle while your income is going up. But patience and discipline are very important ingredients of success and will help you a lot in achieving your financial goals. Always treat your self whenever you achieve a milestone but be conscious of its impact to your budget and financial goals. Treating your self and buying a new phone is probably fine but upgrading your car to a new model which will cause your monthly expense to increase significantly is different.
Enjoying life doesn’t really need to equate to spending a lot of money. Exception to this are vacation trips since they inherently cost money especially if it’s out of country. If your situation would allow this then go for it and you can even delay your financial goals in exchange since this i a great way to spend time and money. It’s just a question of how often do you want to do it and how long do you want to delay your financial goals. But if your travels are causing you to go on debt then you can’t really afford them and should wait until you can.
Your lifestyle changes should always be behind your income increases and not the other way around. Ideally, if you are employed and you are regularly contributing to your investment then the amount of your contribution should remain the same or, better yet, should be increasing over the years until you are ready to retire.