Avoiding "lifestyle creep" when coming from being skint?

[Lifestylecreep]

I've read about "lifestyle creep," the idea that you avoid luxuries when your income goes up so you don't overspend. But how do I do this if I'm coming from nothing?

Due to caretaking duties (mum had cancer and dad with dementia) as well as two young DC, I've worked minimal hours for the past eight years, plus mat leaves in between. Things have been very tight financially but we've managed by being extremely budget conscious. Mum died last year, dad's moved to a carehome, and my youngest is no longer in nursery. I also did my Master's and managed to move up two bands. So suddenly we have quite a bit more money coming in each month. It feels wonderful to have a bit of breathing room but I am also wary of spending it all away, also with cost of living. (We are far from wealthy, I'd say with my paylift and increased hours I'm nearing the middle class.)

But for example, I went eight years without buying a new pair of shoes. I'd love to treat myself! Or DH has been managing with the same winter coat for all this time, it's really time for a replacement. But that takes a large bite out of the extra £400/month I have now. (Not that I'd buy new shoes every month or anything!)

So any suggestions for balancing a modest increase in income with things that feel luxurious but are needed?

What you describe isnt lifestyle creep.

Take your additional wage. Allocate a specific amount to things. Monzo bank is great as you can create pots. So say you have 400 extra a month. Allocate that money across different pots. Could be a nights out pot. A holiday pot. Car savings pot and only stick to what you have. Dont take on debt because you can afford the repayments.

I think lifestyle creep as increasingly your monthly bills. For example getting a bigger car loan, moving house so the mortgage is bigger. You can't reduce these if you needed to.

There is also daily habits like a posh coffee everyday that you get so used to, you'd find it hard to stop.

Things like replacing worn out clothing is not. I was in your position once.
First thing I did was pay off any debts. We then made sure we both (me and DH) had some money that we can do what we want every month without guilt. It's not a huge amount but I can treat myself in small ways. If I want something bigger I save.
We also increased our savings so when something goes wrong there is a pot.

I love vinted, so you can probably get yourself a bargain so replacing things can be cheaper than you think.

Well done, those years sounded tough.

Thanks for the kind words and advise.

We have been extremely frugal, everything from Vinted or eBay all this time, home cooking, mostly veg, second hand toys for the children at Christmas, so we’ve been fortunate not to have debt. But it has been with lots of gritted teeth. I have been using the “pots” system, this has helped me and also allowed me to do an emergency fund. Neither of us has had or will receive an inheritance, so prioritising saving is wise. But then I feel guilty, I’ve gone with second hand shoes all these years, I tried on new shoes and I almost cried, they felt so good! But couldn’t bring myself to buy them and put the money into the children’s birthday pot. It seems sensible to put £200 per month into an ISA but then to put £120 towards new shoes (they were well made boots I reckon would last several seasons) is just…unimaginable for me?

There’s a difference between need and want, get the shoes and the coat because you need them. Best option is to make a budget spreadsheet and in that allocate x pounds for clothing replacement, then have a second budget line for a bit of fun money each which you could spend on more frivolous things like clothes you don’t actually need, make up or going out. Having a budget means you keep the amount in check but you allow yourself to live a bit. Another tip is to not get sucked into loads of kids organised activities, they sound lovely individually but doing multiple in a week is costly, eats into family time and is stressful

Yesterday I wore a pair of shoes I bought in 2009…. It felt so good!! I love them! But I am deffo a victim of lifestyle creep from school fees to holidays … suddenly we earn a lot but don’t have a lot…. So I’ve made a conscious decision now to just reset. And I will buy quality, and hope it lasts like my most fave shoes!

Second hand furniture, clothing like trousers and tops, summer jackets, shoes for occasions/nights out, children's plastic or wooden toys are fine to continue buying secondhand in my view. I still buy BHF/charity furniture as the quality is amazing as well as cheap(ish).

Underwear, shoes you wear every day for work or school, decent winter coats that last ten to twenty years and cuddly toys should be invested in from new if possible so start there imo. You have £400 extra so use £150 towards necessities such as shoes, coats, carpets, £50 towards extras such as Christmas, birthdays and days out. The other £200 goes in savings for a leaking roof, dead washing machine, boiler parts etc, the unforeseeable emergency costs that are fixed in price by tradesmen/shops.

I get what you mean. You’re worried you’ll simply eat into it and get used to the extra money. Maybe wait a year till you’ve saved up 4K then start from there. Keep adding to it and spend as you did, but do get the new coats and shoes, they are essentials that need replacing and you both agree. It’s very easy to change spending habits to spending more than you want to so so you’re right to be careful.

New shoes are likely to last much longer than second hand ones though - that is the benefit of being "rich" enough to spend more upfront. Over 5 years chances are you spend less if you buy something decent quality in the first place.

I agree with a pp who said save £200 and put £200 in a pot to spend and don't feel guilty about buying yourself new shoes for the first time in years.

Something that takes a lot of parents by surprise when their DC reach university age is that the amount that the DC are able to get in maintenance loans is not nearly enough to cover accommodation and living costs if the DC move away from home for university. This is true even for families on very modest incomes. Now that you have some spare money I would open savings accounts for your DC and put a small amount in each month. Starting now means that you have time to build up a meaningful amount by university age and to get the benefit of compounding, ie earning interest on the interest. As your DC are still young, university probably feels light years away, but that time will roll around quicker than you think. If you wait until university feels "near" before you start saving, it may be too late to save anything meaningful. NB My description relates to student finance in England.

I replace my work shoes pretty much year, I literally wear holes in them and it doesn’t seem to matter how much I spend. I shudder to think how long second hand would last.

Anyway, I think the key is to work out a lifestyle you would be content with and stick to it, regardless of income increases. Also what your priorities are. I don’t care about fancy cars and will be sticking with my Honda Jazz until it dies - if it ever does. I do care about holidays and as my income increases, consciously choose to spend more here, as well as putting more money into retirement planning.

Decide on an amount that goes into savings on pay day. Stick to it and spend the rest without guilt. You will have lifestyle creep as you have had a very tight budget but you can get to where you’re less stressed and more comfy and then stick there by simply deciding on the savings total. Reasses every year if you want.

You can also make categories of want vs need. So - a coat when the old one isn’t functional, same with shoes, is a need. A second or third coat after that is a want.

See, I could relate to you not wanting to spend money on shoes but then you said you put it towards your child's birthday rather than savings. Which means you are not exactly frugal, you simply don't want to spend on yourself. Which is a different problem entirely.
I am not saying go wild but it might be worth figuring out why you think you don't deserve decent quality shoes. If you don't figure it out, no matter how much money you have, you will never be able to get rid of the feeling that somehow you don't deserve to spend it on yourself.

Lifestyle creep is inevitable. Make sure you are saving what you need (decent pension, emergency
fund, breathing space/choices fund) and a little bit more on top of that. Then after that, enjoy it. You could die tomorrow.

I don’t think a one off pair of shoes and a coat will take a large bite out of your extra money.

You need some lifestyle creep, because you need a lifestyle where you have proper shoes...

Buy what you all need now to set yourselves up for the winter and Christmas.
In the new year start saving.
There must be a lot of things that need replacing really

Following!

Buy the shoes! Quality shoes will last you a long time, and get your DH coat too.

Sometimes if I am struggling to make a decision about buying something I write I down in a 'wish list' on my phone, if I still need it / want it in a month's time and spending the money doesn't mean we'll go hungry then I get it. Sometimes in a month I think 'the moment has passed I don't actually want to anymore' and sometimes it's 'yes that's a good purchase i do really need those shoes.

Exactly. Treating ourselves in whatever way is what makes life worth living. It doesn’t have to be expensive stuff but a scented candle to lift your mood or a new lippy - the little things that mean a lot and give joy.

I wish I could just take you out and buy some bloody shoes.

shoes are not something you buy second hand. Ditto underwear. And the point is that you buy good quality and you have good shoes for years. You actually deserve to have a dignified life. And same for your whole family.

coats and shoes and report back please 🙏

Thank you, sorry, I wasn’t clear. I meant after I’ve put aside money for savings, what’s left over I see as “discretionary,” but ultimately this is very little, so I lean towards putting it in the DC’s pot rather than spending it on myself. They both have autumn birthdays, plus Christmas so it adds up quickly.

And are you saving for anything specific? I am asking because I have two annual salaries in savings right now and I don't have a goal of any kind so it's just sitting there doing absolutely nothing. If savings becomes an open-ended activity, then it sort of becomes a barrier to living your life. You may say that it's a substantial amount of money (and it is) but even that is not making feel any more secure than I did at 21 living in a house share and working minimum wage job. And when I hear people telling me about their travels in their 20s, I feel rather sad that I did not prioritise living my life fully at the time when I had little financial responsibility.
My dad scrimped and saved all his life, then dropped dead at the age of 45 and his girlfriend took off with his money before we even found out he was dead. Not that I would want to claim it, it's just such a pointless way to live. And I am trying very hard to not follow his example so I am slowly training myself to allow a few frivolous spends in my life. Treat yourself to a coffee, see how it feels. And maybe you can slowly work your way up to the new shoes.

Honestly you won’t ever be a frivolous spender I don’t think as you’ve got learned behaviour so long of being budget concious. The fact you’re writing this post demonstrates that.

I am higher earner. DH is. However we haven’t always been and I spend like I’m not. You wouldn’t catch me food shopping in Waitrose or M&S weekly. Aldi all the way. I buy clothes when needed but still shop around. I don’t big second hand though as I’m an odd shape but designer - god no. It’s ingrained in me to be sensible.

Buy cheap buy twice. Buy good quality but shop around and things last longer.

This is so true. I spent enough of my 20s and early 30s worrying about money that now DH and I are in a much more secure financial position, I still instinctively look for real value and reflexively ask myself “do I really want this” about everything. I don’t mind though, I enjoy the buzz of a good bargain!

I really resonate with this! My husband and I were both earning quite nicely but then decided to change careers. He became self-employed and I took a huge pay cut to retrain. The last 18 months have been very budget conscious but this month we are going to finally have the money uplift. My plan is to prioritise as 1. Bills 2. Savings 3. Spending