Understanding the Impact of Lifestyle Creep on Borrowers

John 7 Min Read

Lifestyle creep, also known as lifestyle inflation, is when a person’s spending increases along with his or her  income. It’s one of those problems that get worse before it gets better. Often, due to the effects of lifestyle creep, people have to resort to legitimate money lenders to make ends meet. In this article, we will understand why most people have such a problem with this. 

Reasons for Lifestyle Creep

Social Pressures and Comparison

Thanks to exposure to people on social media  – friends, influencers, celebrities – living their ‘best’ life, many feel the pressure to attain the same standard of living as what they see,

And because they’re compelled to match the spending habits of those around them, they end up spending more money on things they don’t need. This could mean splurging on expensive gadgets, dining at fancy restaurants, or even living in upscale neighborhoods, even at the cost of a big financial burden. 

Psychological Factors

Our mind is powerful, as it strongly affects our behavior. However, the wrong thoughts and mindsets are just as strong of an influence on our habits as the right ones. This, of course, also apples to our financial life, and is one of the biggest factors behind lifestyle creep. Here are a few examples : 

Seeking immediate pleasure – Instant gratification can lead to borrowers choosing short-term enjoyment over long-term financial stability. If this applies to you, try practicing delayed gratification. The extra thinking time can help you determine how to use your money to achieve short-term and long-term goals. 

Misconception about increased earnings – There are a lot of professionals who mistakenly believe that if they are earning more income, it is only natural for them to spend more as well. This shouldn’t be the case. Billionaire Jeff Bezos suggests that people should live below their means to maximize the potential of their income and spend them more effectively. 

It’s important to be aware of lifestyle creep and its potential impact on our financial well-being. While treating ourselves occasionally is fine, constantly succumbing to the temptation of upgrading our lifestyle can hinder our ability to save and invest for the future.

Ease of Access to Credit

Easy access to credit, such as credit cards and loans, can worsen lifestyle creep. Borrowers may be tempted to rely on debt to fund their increasing expenses, resulting in a continuous cycle of borrowing just to sustain an unaffordable lifestyle. Ultimately, this leads to accumulating debt and incurring higher interest fees.


Consumerism asserts that happiness and success are linked to having more material possessions and spending on experiences such as food and travel. As a result, people may feel pressured to splurge on these things to try and attain a sense of happiness and fulfillment. Through advertising, this culture bombards us with messages to spend our money on things that will make us feel good but ultimately do not need.

Impacts of Lifestyle Creep on Borrowers

Increased Debt Burden

When people who invest more to pay for their investments’ bigger spending, they run up the major debt because, please note that paying more money in interest could worsen your credit scores. You can seek help from a professional to help you assess your financial capabilities. 

Decreased Savings and Retirement Planning

Focusing solely on the spending at the moment enables one to neglect saving for the future and preparing for life after retirement. With such a short-term perspective, people are not prepared to address their future needs and those for older adults, and I am sure that you don’t want to experience such permanent money problems. Always remember to save up for the future, it is hard to come unprepared to address the sudden needs or maintain the lifestyle after you have quit working.

Stress and Anxiety

Trying not to spend money can be a huge burden. For a start, it hurts your mental health. Your way of living can be hard to maintain, and your life can become unbearable. But are you ready that eventually money worries take over your life, and it doesn’t just make you feel bad; they also make you sleep badly, damage your relationships, and even damage your body. Can you really afford to experience all these? they are covering your life.

Difficulty in Achieving Financial Goals

Much like any additional spending, lifestyle creep makes it hard to pursue more significant financial achievements such as homeownership. It’s because a significant portion of your money goes to non-essentials, so you end up with less money to invest and save. It is especially problematic for individuals who take loans because, without financial accountability, it is nearly impossible to save money for buying a house, saving for their children’s education, or retirement. 

Avoid Lifestyle Creep and Make Smart Financial Decisions

Lifestyle creep, a problem that arises entrenched in social, psychological, and economic factors, can seriously hurt your finances. But with a conscious control of how one spends their money and a determination to have stable finances, you can stop it from creeping in, allowing you to finally meet your long-term goals.

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