1 00:00:00,059 --> 00:00:02,384 Speaker 1: Hi, I'm Stacey Hyde and I'm back with another 2 00:00:02,484 --> 00:00:06,533 episode of Better Financial Health in 15 minutes or less. 3 00:00:06,533 --> 00:00:10,970 And today I'd like to talk about something I call lifestyle 4 00:00:10,970 --> 00:00:11,250 creep. 5 00:00:11,250 --> 00:00:18,251 You got the big raise, you got the new car, but at the end of 6 00:00:18,271 --> 00:00:20,605 the month there's still almost no money left. 7 00:00:20,605 --> 00:00:25,353 Where did it go, and how does this, and what can you do about 8 00:00:25,413 --> 00:00:25,452 it? 9 00:00:25,452 --> 00:00:32,868 So lifestyle creep is when, slowly, over time, you maybe 10 00:00:32,948 --> 00:00:38,240 start not bringing your lunches often, so you eat out more or 11 00:00:38,341 --> 00:00:42,268 you meet friends for drinks, but instead of going to somebody's 12 00:00:42,328 --> 00:00:47,740 house, you're going out to a bar but now it's not the corner bar 13 00:00:47,740 --> 00:00:51,149 , it's this nicer bar in this fancy restaurant and sometimes 14 00:00:51,170 --> 00:00:55,966 you're hungry, so you stay and have dinner, or you order 15 00:00:56,045 --> 00:01:00,533 takeout or meal delivery services multiple times a week 16 00:01:00,694 --> 00:01:04,469 instead of going to the grocery store, and so all of those 17 00:01:04,631 --> 00:01:05,634 things add up. 18 00:01:05,634 --> 00:01:13,168 Or maybe, instead of taking the budget-friendly all-inclusive 19 00:01:13,269 --> 00:01:17,522 vacation or going camping, you've gone to you know a much 20 00:01:17,641 --> 00:01:21,350 nicer resort and you've upgraded your plane ticket, because who 21 00:01:21,411 --> 00:01:24,948 doesn't want more leg room and to make sure that they can get 22 00:01:24,989 --> 00:01:26,581 their bags in the overhead bins? 23 00:01:26,581 --> 00:01:28,284 Been there, done that. 24 00:01:28,284 --> 00:01:35,001 So that type of spending can really erode your savings and 25 00:01:35,221 --> 00:01:40,388 impact your long-term goals and it can cause you to have a 26 00:01:40,447 --> 00:01:44,873 paycheck to paycheck lifestyle, even making six figures. 27 00:01:45,554 --> 00:01:50,084 I was talking to a friend the other day and she was like man, 28 00:01:50,126 --> 00:01:51,409 I need a financial planner. 29 00:01:51,409 --> 00:01:52,671 And I started asking her. 30 00:01:52,671 --> 00:01:55,626 She goes oh, I know, we spend what'd? 31 00:01:55,626 --> 00:02:00,019 She tell me, a couple of thousand dollars a month on meal 32 00:02:00,019 --> 00:02:00,980 delivery services. 33 00:02:00,980 --> 00:02:05,394 I was like, oh, wow, so that's you know. 34 00:02:05,394 --> 00:02:09,806 And she didn't really even seem willing to cut back on that. 35 00:02:09,806 --> 00:02:13,997 And that's really the first step is being understanding 36 00:02:14,057 --> 00:02:14,639 where it's going. 37 00:02:14,639 --> 00:02:20,126 She understood that, but she wasn't ready to make a change. 38 00:02:20,126 --> 00:02:24,691 And so, in order to have a better life in the future, for 39 00:02:24,991 --> 00:02:31,342 future you, you have to make some changes today, and it's 40 00:02:31,382 --> 00:02:34,671 really not any fun to live paycheck to paycheck. 41 00:02:34,671 --> 00:02:38,168 So what you want to look at when you look to see what's 42 00:02:38,228 --> 00:02:42,825 going on she obviously had done this are your expenses rising 43 00:02:42,966 --> 00:02:46,414 faster than your income, and that can be easy today with 44 00:02:46,496 --> 00:02:49,024 inflation and the tariffs and things like that going on. 45 00:02:49,665 --> 00:02:50,927 And you want to compare. 46 00:02:50,927 --> 00:02:56,387 Pull out or go online, as most of us do, and pull an old credit 47 00:02:56,387 --> 00:02:59,561 card statement from two years ago, pull an old bank statement 48 00:02:59,600 --> 00:03:03,367 from two years ago and compare what your expenses are today 49 00:03:04,248 --> 00:03:08,322 versus what they were then, and a lot of the streaming services 50 00:03:08,423 --> 00:03:13,472 have had, um, quite a bit of increases and if you're not 51 00:03:13,612 --> 00:03:16,283 using them all, you may want to cancel them. 52 00:03:16,283 --> 00:03:20,694 I know some people that they'll have netflix for three months. 53 00:03:20,694 --> 00:03:22,763 They'll watch all the stuff they want, then they'll get 54 00:03:23,022 --> 00:03:26,669 apple for a couple of months, watch what they want there and 55 00:03:26,688 --> 00:03:30,033 then, and they kind of cycle through them so they never have 56 00:03:30,114 --> 00:03:31,983 more than one at a time. 57 00:03:31,983 --> 00:03:35,049 And then you know, I think we're all addicted to our amazon 58 00:03:35,049 --> 00:03:40,888 prime for not just the movies, um, but also the free delivery. 59 00:03:40,888 --> 00:03:44,675 Or, as my husband likes to point out, it's not free, we're 60 00:03:44,695 --> 00:03:49,306 paying for the included delivery services and I think that is a 61 00:03:49,385 --> 00:03:51,050 good distinction to look at. 62 00:03:52,032 --> 00:04:00,204 But what you want to think about is sort of the um 50-30-20 rule 63 00:04:00,204 --> 00:04:06,832 and anytime you get a raise, you really want to limit the 64 00:04:06,954 --> 00:04:13,530 lifestyle piece to 30% of your raise, or if it can be less, 65 00:04:13,669 --> 00:04:14,491 that's all the better. 66 00:04:14,491 --> 00:04:19,446 I was actually telling my daughter and son-in-law that the 67 00:04:19,446 --> 00:04:24,012 real key to building lasting wealth is to not raise your 68 00:04:24,072 --> 00:04:25,920 lifestyle every time you got a raise. 69 00:04:25,920 --> 00:04:31,411 If you were comfortable at one level, just stay there and then 70 00:04:31,552 --> 00:04:36,644 you can take that money and increase your savings, increase 71 00:04:36,704 --> 00:04:41,812 your 401k at work, add more to your Roth IRA, but don't forget 72 00:04:41,891 --> 00:04:45,841 to put that money in your savings and set it aside. 73 00:04:45,841 --> 00:04:49,509 No, it doesn't have the potential to grow as much as 74 00:04:49,569 --> 00:04:54,725 stuff that you put in stock, but it's there if you need a new 75 00:04:54,766 --> 00:05:00,995 car or you have a repair on your home or something else, or you 76 00:05:01,079 --> 00:05:03,749 have an unexpected medical bill bill, because, let's be real, 77 00:05:04,762 --> 00:05:08,535 out-of-pocket payments for medical expenses can really add 78 00:05:08,595 --> 00:05:11,103 up quickly, so you want to make sure you're prepared for that 79 00:05:11,182 --> 00:05:11,463 too. 80 00:05:12,365 --> 00:05:17,560 So the challenge I want to ask kind of ask you to try out today 81 00:05:17,560 --> 00:05:22,192 is, the next time you get a raise, really be deliberate 82 00:05:22,494 --> 00:05:27,365 about where you spend that extra money and make sure that it 83 00:05:27,586 --> 00:05:30,233 really has a nice impact for you . 84 00:05:31,221 --> 00:05:35,329 Or what you could even do is take the raise, don't change 85 00:05:35,389 --> 00:05:38,487 anything for a month and see how it feels to have that extra 86 00:05:38,547 --> 00:05:39,630 money in your bank account. 87 00:05:39,630 --> 00:05:42,702 Don't let it just sit there in your regular checking account, 88 00:05:42,742 --> 00:05:44,608 though, because that's not gonna going to earn you anything. 89 00:05:44,608 --> 00:05:48,047 You want to make sure you're transferring it to a high yield 90 00:05:48,067 --> 00:05:51,540 savings account, a money market account or to fund some of those 91 00:05:51,540 --> 00:05:52,822 other longer term goals. 92 00:05:52,822 --> 00:05:59,572 So, and the key thing to keep in mind is that real wealth does 93 00:05:59,572 --> 00:06:01,802 not come from making more money . 94 00:06:01,802 --> 00:06:06,646 It comes from keeping more money and, at the end of the day 95 00:06:06,646 --> 00:06:11,651 , your future self will thank you for keeping more money today 96 00:06:11,651 --> 00:06:17,550 , and it will grow over time, even if it feels like for a 97 00:06:17,589 --> 00:06:20,100 while that it's not making that much difference. 98 00:06:20,100 --> 00:06:24,223 I promise you the power of compound interest will work for 99 00:06:24,283 --> 00:06:25,166 you over time. 100 00:06:25,166 --> 00:06:26,670 Thanks for tuning in. 101 00:06:26,670 --> 00:06:30,004 This has been another episode of Better Financial Health in 15 102 00:06:30,004 --> 00:06:30,706 Minutes or Less.