Lifestyle creep, also known as lifestyle inflation, is a phenomenon that occurs when as more resources are spent towards standard of living, former luxuries become perceived necessities. [1] [2] [3]
Lifestyle creep, also known as lifestyle inflation, is a phenomenon that occurs when as more resources are spent towards standard of living, former luxuries become perceived necessities. [1] [2] [3]
An individual's discretionary income could increase as a result of increased income or decreased cost, such as paying off a mortgage. [1] As discretionary income increases, individuals are able to spend money on things that were previously unaffordable. [1] Lifestyle creep occurs when spending increases at the same rate as income. [3] It can be reflected in purchases, such as expensive vehicles or a second home. [1] [2] Spending money on things with ongoing maintenance costs, such as club memberships, also are demonstrated in lifestyle creep. [4]
Lifestyle creep tends to be insidious, so it can be difficult to realize it is occurring. [2] [5] [6] This is why some experts have called it a “silent inflation”. [5] Although it is difficult to perceive, it can be contagious as people compare their own lifestyle with others. [5] Signs of lifestyle creep could include difficulty saving money and increasing debt. [2] Making a budget and setting a limit on expenses could potentially limit lifestyle creep. [2]
This phenomenon is common among young adults in their mid-twenties to early thirties. [5] In this age group, rapid career advancements lead to more discretionary income which can lead to excess spending. [5] Reasons also include spender's need to project a certain image and social status onto others, thus buying expensive gadgets and items just to fit in. [7]
It can also become a particular problem near the age of retirement, where individuals tend to have the highest earning potential and decreased costs, such as not having the financial burden of raising children. [1] When individuals retire and try to maintain a formerly lavish lifestyle, they can suffer financially. [1] Furthermore, it is challenging to downgrade lifestyle. [5] [6]
Macroeconomics is a branch of economics that deals with the performance, structure, behavior, and decision-making of an economy as a whole. This includes regional, national, and global economies. Macroeconomists study topics such as output/GDP and national income, unemployment, price indices and inflation, consumption, saving, investment, energy, international trade, and international finance.
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