A Very Human Problem: Part I

By The Advocates

Without providing any statistics, I’m guessing you know that we (Americans) have a lot of debt and that’s not good. I’ll bet you know someone who is struggling to get out debt. * I’ll bet you know someone who has a ton of debt and isn’t really concerned about it. Maybe the someone is you.

People have long viewed the owners of nice things as wealthy. It’s part the reason people like Ronald Read, a closet millionaire, go unnoticed. Check out his story here, it’s worth a read. Pun intended.

It’s time we severed the link between financially healthy people and the ownership of nice things. It’s not an inverse correlation per se (since wealthy people often do have nice stuff), but it’s not a foregone conclusion either. The guy driving around in a Porsche might be down to his last cent.

Of the many reasons people accumulate debt, the most insidious and preventable is lifestyle creep, which is shorthand for the phenomenon where greater access to money from wage increases cause people to correspondingly inflate their lifestyles, leading to higher expenses, debt, and reduced savings.

Most humans are competitive to a degree. Looking at my kids, I can see that it starts early in life. They vie for my attention, their siblings’ possessions, the last bit of cake and so on.

Lifestyle creep is an adult version of this behavior. Seeking to compete with those in our sphere of influence, social media personalities, and others, people make financially inadvisable purchases to flaunt or to fit in.

Our justification may be that we think we earned it with hard work. We might think the purchase and/or the accompanying social implications will make us happy. We may not realize we’re doing it at all if this was common practice in our upbringing. These reasons, however, do not alter the truth. 

The real result of lifestyle creep is a pair of handcuffs. We become prisoners in our own lives, chained to an income level required to support our increasing expenses.

What we thought would make us happy, acceptable, and satisfied is actually an impediment to our real fulfillment.

Our tendency is to pursue instant gratification over long term success, trading our future best for an immediate desire.  These choices come at a cost: debt, wasted potential, and a dangerous precedent for future decisions.

Lifestyle creep has burrowed into our collective psyche. It’s anchored there by our need to fit in, our need to compete, our need to soothe ourselves. These are the most basic of our instincts!

What cerebral re-wiring must we do to both identify our triggers and stop the behavior? We’ve got some ideas, but we’ve covered enough for today.

Next week’s article provides strategies you can use to reverse course and put yourself on the path to the future you want to live. But you should know that the solution is more complex than just “being better” with money. Human psychology is a bigger factor in your financial success that the dollars and cents that make up your budget.

Ready to start planning? Click here to schedule your free, no obligation appointment today.

*We acknowledge that people accumulate debt for a variety of reasons. Many are the victims of unfortunate circumstances, or simply had no other choice to make ends meet.  This article is intended for those who have consciously or otherwise become participants in lifestyle creep.