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Managing lifestyle creep is challenging financially and psychologically, especially with inflation. Expert strategies keep day-to-day spending in check.
The other day I had to run out to buy cooking oil to make dinner. I knew which brand I wanted because it was a good size and it was cheap—$5 when I bought it about three months ago. I was surprised and annoyed to find out that the same bottle of oil, which was the exact same size and shape with the same type of oil in it, was now $7.
It had gone up $2 in the last three months. Now, that doesn’t sound like a lot since it’s “only two dollars,” which shouldn’t affect your budget. But add in other expenses like the cost of gas, other grocery items and rent, and those “tiny” increases add up. Inflation really makes the wallet hurt.
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Lifestyle creep versus inflation
We spoke to two experts to find out how to deal with increases in household spending, in terms of both practical steps and the emotional side. Nearly 50% of Canadians say that money worries negatively affect their mental health, according to an Ipsos survey. First, we need to look at the difference between inflation and lifestyle creep. Inflation is when prices of goods and services increase with a corresponding decrease in the purchasing power of your money.
Lifestyle creep is when your standard of living improves as your income rises and former discretionary or luxury items become expectations. Think having all the entertainment streaming options instead of one or two because now you can afford it.
You can control lifestyle creep to an extent through budgeting and being aware of your spending habits. With inflation, there’s only so much you can control. If prices increase for household necessities, you end up spending more, whether you like it or not.
You can switch to cheaper items to save money, but at a certain point you may be sacrificing usability for price. Think one-ply toilet paper; it’s cheaper but you go through it faster, leading to spending more money. (Also, it doesn’t feel great.)
Since it feels like everything is going up except our salaries, how can you rein in the involuntary lifestyle creep and get some sense of control over your money?
How to avoid lifestyle creep and cut costs
Chantal Chapman, CEO and co-founder of financial literacy education firm The Trauma of Money in Vancouver, says to not let a scarcity mindset sabotage your spending. “If there was a time in your life when your income was low and you really had to restrict [your spending], that actually can lead to compulsive behaviours such as overspending.”
“It comes down to discipline,” says Elke Rubach, president of Rubach Wealth in Toronto. She admits that it does suck, saying, “I think the only blanket advice we can use for everyone is to sit down and do a reality check, because just feeling the pinch isn’t a healthy thing, because then you’re like pinching, pinching, pinching.”
She says one way to counteract the pinching is to check what’s causing it. “Is it actually the economy or is it something you can control? Is it eating out? Or is it that you’re buying groceries but things are going to waste? Are you buying the right things?”
How to save money on groceries in Canada
Another tactic is to shop at the local stores in your neighbourhood, says Rubach. With the Loblaws boycott proposed for May, she says, shopping local is “a very different approach. It’s not a negative. You’re doing the same action, to be clear, but instead of looking at it as ‘let’s screw Loblaws’—because they’ll just bring in technology and fire employees—look at your typical grocer at the corner of the street. They’re a lot cheaper.”
She also says shopping every few days can help keep costs down, especially if you live alone or have a small family. That way, you can plan your meals, reduce food costs and waste, and take advantage of sales.
Chapman says that even if you can afford price increases, try to contain them by limiting your splurges to certain purchases.
She says that while it’s nice and a privilege to be able to afford what you want and need, don’t let that dictate your spending. “You can say, ‘I don’t need to worry about how much I’m spending on my coffees,’ but maybe choose one area versus just applying that to everything if you are concerned about your budget.”
How to save money on clothes
Rubach advocates for second-hand clothing, swaps and hand-me-downs, especially when it comes to children. “There’s no need to buy new things every school year,” she says. “I’m guilty of doing that when my first child was born, spending ridiculous amounts of money on clothes.” Facebook marketplace or local FB groups are a good source for clothes and other household goods. Check your local neighbourhood for clothing swaps.
When faced with inadvertent lifestyle creep, we can revisit our budgets and attitudes to spending—at least until inflation, prices and interest rates slow down.
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