Increasing the expenses at the same rate as the income, a phenomenon known as “Lifestyle Creep”, makes thousands of people remain without savings, even if they have above average salaries. Experts explain why this happens.
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Ten years ago, when he moved from Cardiff to London because he had obtained a job in financial services, Victoria Leyton received a wage increase of 10,000 pounds per year. “The new salary seemed a considerable amount, even though in London the cost of life was higher,” she told The Sun.
The additional income (ie about 830 extra pounds per month) allowed, at first, small pampering: taxis instead of subway, gifts more expensive for friends, clothes “Investment” from the ranges far over the brands he usually bought. “They all seemed minor details, but they gathered. Instead of putting money aside, I got to support a more expensive lifestyle,” she recognizes.
In just a few months, the financial situation of Victoria returned exactly to the point before the salary increase.
The phenomenon confirmed by experts and banks
A study by Starling Bank reveals how 30% of people with revenues of over 100,000 pounds do not have enough money for basic invoices and shopping, because they spend too much on luxury. “If you feel that, although you have a higher salary, at the end of the month you are as tight as before, it is possible to be “Lifestyle Creep”, respectively expenses that increase proportional to the income “, Explains Becca Stroud, personal finance expert at Starling Bank.
“In Romania in 2025, I see almost the same scenario almost daily: someone receives a salary increase, changes their phone, adds two or three premium subscriptions, reserves a longer holiday and, in a few months, realizes that it has no more money than before. It is what is called” Lifestyle Creep ” the positive effects of salary enlargement.
The problem is not only individual, but also one that belongs to the organizational culture. In many companies, the additional work or achieving some goals is directly rewarded with wage bonuses and enlargements, without any discussion about managing this extra income ”, Explain, for Adevărul, Corina Petcu, specialist HR.
Therefore, employees receive more money, but without a real frame or plan to help them use that long-term amount, the salary increase is quickly transformed into new subscriptions, higher rates or discretionary expenses.
“Instead of strengthening the employee’s financial safety, the money becomes fuel for accelerated consumption. Therefore, I think the role of an employer does not stop only in providing salary increases or performance bonuses. We need programs to show the employees how you can turn that salary into a real asset. If your income would be reduced by 20% overnight? she says.
What solutions do we have
In his opinion, the exercise to analyze where the money you receive is going is a categorical imperative. “When you see black on white that the salary increase evaporates on higher rents, rates for luxury goods or subscriptions that you are just using, you start to understand how easy this” Lifestyle Creep “is installed. says Corina Petcu.
As a solution, it recommends the formation of a simple reflex: the automatic separation of a part of the income as soon as they enter into the account. “In some companies, this habit is practiced by simulations: the employee directs part of his bonus or enlargement to a separate account, treated as intangible, regardless of whether it is intended for a common project, an emergency fund or a personal cause. It is not important the punctual purpose, but to train this gesture, so as to become a natural reaction.”
In the long term, emphasizes the HR specialist, the discipline to set aside money before integrating into current expenses transforms wage increases from a source of additional consumption into a real safety and financial freedom tool.
“Financial safety is not seen in a new bag or a city break added to the calendar, but in the quiet of knowing that, no matter what happens in the market, you have the resources to continue to live well. However, the inflation of the lifestyle is not solved with moralizing tips, but with experiences and contexts that we change, Valuable than a higher salary: the ability to turn this surplus into freedom, not in luxury label debts ”concludes Corina Petcu.
