8) Resist Lifestyle Creep
The term “lifestyle creep” refers to increased spending due to an increased income. It’s natural to improve one’s lifestyle if you get a raise or promotion, and you should – to an extent. But if you were able to live off your old salary, you shouldn’t need to spend the additional money. Of course, it’s appealing to do so and there’s the additional temptation of “keeping up with the Jones’s”. However, the best thing to do is stash the extra cash in your retirement account and forget about it. It’s okay if it’s not the whole chunk of extra money – half will do. This is also a good time to increase the amount of money being deducted from your paycheck for your 401K. Request that 50% of your raise be directed to your retirement account and you won’t feel the loss as much since it’ll be deducted pre-taxes.
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