A Small Leak

“Beware of little expenses. A small leak will sink a great ship.”     -Ben Franklin

There exists a term in the finance world, “lifestyle creep,” and it sure as hell is a real thing.  Your spending is a muscle that expands and contracts. It is elastic. With many young clients we see the impact of the mythical “lifestyle creep.”  You get used to living on what you have, but when what you have keeps increasing, the new expenses start to creep in over time!

It could start with the addition of a daily habit.  The extra cup of coffee on the way to work. “Hey, you earned it and have the money.”  Then the additional shirt, pants, whatever, cause “hey, you earned it and have the money.”  Then your car dies, and you get a nicer, newer car this time around, cause “hey, you earned it and have the money.”  And so the creep goes on and on till you say “There isn’t money left at the end of the month! How can that be? We haven’t really done anything differently, and we don’t live extravagantly!”

For many, this creep is natural and doesn’t need to be addressed as there truly is enough money in the pot to provide for a certain lifestyle.  However, for just as many, although the creep may be natural, it does need to be addressed because your cookie jar has far too many hands in it.

Exercise – print your credit card statement and your last bank statement.  Don’t pull it up on your phone or computer, print that sucker out and let it stare right at you.  Take a pen and go line by line and look at every purchase. Be sincere, what creep do you see?

If you are not sure if you are one of the many that need not worry, or one of the many who need to adjust course, let’s get that dialogue started today.