Habit Creep: The Proven, Reasonable and Totally Unsexy Way to Become More Successful

There is a common phenomenon in the world of personal finance called "lifestyle creep." It describes our tendency to buy bigger, better, and nicer things as our income rises.

For example, say that you receive a promotion at work and suddenly you have $10,000 more of income each year. Rather than save the extra money and continue living as normal, you're more likely to upgrade to a bigger TV or stay at better hotels or buy designer clothes. Your normal lifestyle will creep up slowly and goods that were once seen as a luxury will gradually become a necessity. What was once out of reach will become your new normal. (1: We could have an entirely separate discussion about whether lifestyle creep is a good thing or not. Typically, the concept is viewed in a negative light because it indicates unnecessary consumerism and the purchasing of items that you don't really need. Furthermore, lifestyle creeps seems to increase the risk of loss aversion. For example, once you own designer clothes and an expensive car, it can be difficult to go back to rocking Levis and driving a Toyota Camry. That said, I'm not entirely against buying nice things for yourself (provided they are useful or that they bring you happiness), but this discussion is outside the scope of this article. I bring up lifestyle creep here simply to provide an example of how human behavior changes over the long-term in a reliable and long-lasting way. It's an example of how you can make changes that actually stick and, as is always the case with humans, those changes can be positive or negative.)

More...