What is lifestyle creep?Many of us experience this phenomena and don’t even realize it. Basically, lifestyle creep pertains to how our style of living increases as we advance financially (most often through our careers). Once, you drove a 15 year old “beater” car. Now, you drive a BMW. You used to only vacation where you could pack the car and drive. Now, you fly your family of five to Europe every year. I see this issue almost every day when advising clients. Quite frankly, it’s human nature to want more. Most of the time wanting more is just selflessly wanting to provide further for those we love. I certainly can identify with that; I want to provide the best for my wife and children. Unfortunately, most of those experiences cost money. At the end of the day, lifestyle creep is virtually unavoidable.
What’s the fear?Why is lifestyle creep scary if it’s unavoidable and human nature? The reality is lifestyle creep has destroyed more people’s financial lives than almost any other thing I have seen. People want to spend when they get a taste of financial wealth. In their eyes, this wealth equates to freedom. Many times they simply lose control. They buy beach homes and time shares, campers and boats. They commit to country clubs and extravagant lifestyles. These things aren’t just expensive to do, they are expensive to maintain — don’t forget that. The two biggest problems with lifestyle creep are:
- Once you get a taste, there is no turning back.
- Most people don’t save accordingly to maintain these lifestyles.
What can be done?How does working with a financial planner help? For starters, our clients are encouraged to leverage our working relationship appropriately, before they go out and make a large lifestyle purchase. We advocate contacting us, so we can start with a simple dialogue. We ask them to spell out their dreams and wishes. Together, we quantify what this means financially (and personally) to them. Taking into account timing and cost, we then set-up a game plan. How can we plan responsibly to make those dreams come true? We figure out how the client can maintain these wants forever by adjusting their plan. All this leads to accounting for what they’ll need to save, or alter, along the way. Additionally, repercussions of their decisions are shown through modeling software. Through this process, we can determine the net effect to their overarching financial plan and what levers need to be adjusted to make this dream a reality. Then, and only then, can we can look each other in the eye and put a well thought-out plan together. During that planning process, we’ll figure out what adjustments are needed, as well. Sometimes this means you need to work longer, or cut out other expenses. Other times, it’s simply increasing savings by a certain percent to calibrate for this new lifestyle expense. Whatever these changes are, it comes from hours of dialogue, planning, modeling, and soul searching. I found many times after going through all of this, one of the spouses speaks up and says, “I think our priorities and efforts are better spent elsewhere.” I’ve also seen the opposite, where both spouses get really excited and say, “Great let’s do this and thanks Andrew for putting a plan together to make it happen!” Through the process, they now know what tweaks must be done in order to get there.
Trick or Treat!If you are not careful, these treats may just be a trick after all. Without a plan, lifestyle creep can be very scary and stressful. A non-sustainable treat that may lead to a lot of angst in your life. Regardless if you shuttle the kids from house to house, go to an adult dress up party, or simply sit at home to handout candies to the neighborhood children, the scariest thing you might experience this season could be the lifestyle creep right around the corner! If you are fearful you are already there, don’t hesitate pick up the phone and give us a buzz (302-765-3500)! [/et_pb_text][et_pb_text admin_label=”Social Share Buttons” background_layout=”light” text_orientation=”left” use_border_color=”off” border_style=”solid” custom_margin=”0px|||” custom_padding=”0px|||” disabled=”off” background_position=”top_left” background_repeat=”repeat” background_size=”initial”] [ayssocial_buttons id=”2″] [/et_pb_text][et_pb_text admin_label=”Find Out More banner” background_layout=”dark” text_orientation=”left” background_color=”#00945d” use_border_color=”off” border_color=”#ffffff” border_style=”solid” custom_padding=”10px|10px|10px|10px” disabled=”off” global_module=”743″ saved_tabs=”all” background_position=”top_left” background_repeat=”repeat” background_size=”initial”] In his role as Financial Planner, Andrew forges lifelong relationships with clients. He coaches them through all stages of life and guides them to better achieve their life goals. For more information about Andrew or the other firm partners, Kyle Hill and David Levy, click the link below. Find out more about Andrew Rosen CFP® Find out more about Kyle Hill CFP® Find out more about David Levy CFP® [/et_pb_text][et_pb_text _builder_version=”3.12.2″]
Financial planning and Investment advisory services offered through Diversified Financial Consultants, LLC, a registered investment advisor. Securities offered through Securities Service Network, LLC, Member FINRA, SIPC . Associates of Diversified Financial Consultants are registered representatives of Securities Service Network, LLC, a registered broker/dealer, 9729 Cogdill Road, Knoxville, TN 37932. (800) 264-5499.[/et_pb_text][/et_pb_column][et_pb_column type=”1_3″][et_pb_signup admin_label=”aWeber – Email Optin” saved_tabs=”all” global_module=”1325″ provider=”aweber” mailchimp_list=”none” aweber_list=”4484965″ button_text=”Subscribe” use_background_color=”on” background_color=”#00945d” background_layout=”dark” text_orientation=”center” use_focus_border_color=”off” use_border_color=”off” border_color=”#ffffff” border_style=”solid” custom_button=”on” button_text_color=”#00945d” button_bg_color=”rgba(255,255,255,0.5)” button_letter_spacing=”0″ button_use_icon=”off” button_icon_placement=”right” button_on_hover=”on” button_text_color_hover=”#00945d” button_bg_color_hover=”rgba(255,255,255,0.34)” button_border_color_hover=”#00945d” button_letter_spacing_hover=”0″ description=”Subscribe to Blog” background_position=”top_left” background_repeat=”repeat” background_size=”initial”] Subscribe to Blog [/et_pb_signup][et_pb_text admin_label=”Blog Post Sidebar” background_layout=”light” text_orientation=”left” module_class=”blog-post-sidebar” use_border_color=”off” border_color=”#ffffff” border_style=”solid” disabled=”off” global_module=”292″ saved_tabs=”all”]
[/et_pb_text][et_pb_button admin_label=”Button – View All Posts” global_module=”1158″ button_url=”/blog/” url_new_window=”off” button_text=”View All Posts” button_alignment=”center” background_layout=”light” custom_button=”on” button_text_color=”#ffffff” button_bg_color=”#00945d” button_letter_spacing=”0″ button_use_icon=”off” button_icon_placement=”right” button_on_hover=”on” button_text_color_hover=”#00945d” button_bg_color_hover=”#ffffff” button_border_color_hover=”#00945d” button_letter_spacing_hover=”0″ disabled=”off” saved_tabs=”all” /][et_pb_button admin_label=”Button – Get Started” button_url=”/get-started/” url_new_window=”off” button_text=”GET STARTED” button_alignment=”center” background_layout=”dark” custom_button=”on” button_text_size=”34″ button_text_color=”#ffffff” button_bg_color=”#00945d” button_border_color=”rgba(0,148,93,0.1)” button_border_radius=”10″ button_letter_spacing=”0″ button_use_icon=”on” button_icon=”%%40%%” button_icon_color=”rgba(224,43,32,0.75)” button_icon_placement=”right” button_on_hover=”off” button_text_color_hover=”#00945d” button_bg_color_hover=”rgba(255,255,255,0.9)” button_border_color_hover=”#00945d” button_letter_spacing_hover=”0″ disabled=”off” global_module=”630″ saved_tabs=”all” /][/et_pb_column][/et_pb_row][/et_pb_section]