Got a BIG Pay Rise? Don’t Let Lifestyle Creep Steal Your Wealth

A big pay rise is a moment to celebrate. You’ve earned it—whether through hard work and dedication or maybe through a promotion or new job. But before you upgrade your car, move into a bigger home, or start dining out more often, there’s a silent financial trap you need to watch out for: we call it lifestyle creep.

What Is Lifestyle Creep?

Lifestyle creep happens when your spending increases in line with your income. It’s not reckless—it’s subtle. You start buying nicer clothes, subscribing to premium services, or booking more expensive holidays. Over time, your expenses quietly rise to match your new income, leaving little room for saving or investing more.

The Hidden Cost of “Living Better”

Let’s say you receive a $20,000 annual pay rise. Instead of saving or investing it, you upgrade your lifestyle—new car loan, more dinners out, and a few luxury purchases. Suddenly, your monthly expenses are up by $1,500. That’s $18,000 a year—almost your entire raise.

Now imagine if you had invested just half of that raise. Putting $10,000 a year into a share portfolio earning 8% annually could grow to over $250,000 in 15 years. That’s the power of resisting lifestyle creep.

How to Enjoy Your Raise Without Losing It

1. Pause Before You Spend

   Celebrate your success—but don’t rush into spending. Give yourself time to plan.

   
   

2. Automate Savings & Investments

   Set up automatic transfers to savings or investment accounts. Treat them like non-negotiable expenses.

   
   

3. Upgrade Mindfully

   Choose one or two meaningful lifestyle upgrades. Keep the rest of your spending steady.

   
   

4. Track Your Spending

   Use budgeting apps to stay aware of where your money goes. Awareness is key.

   
   

5. Set Financial Goals

   Whether it’s buying a home, retiring early, or travelling more—let your goals guide your spending not your emotions or impulses.

To really understand this better, let’s compare two scenarios over 15 years:

• Spending the full $20,000 pay rise annually

• Investing $10,000 of that raise each year at an 8% return

By year 15, the investor has accumulated over $350,000, while the spender has simply consumed $300,000.

A pay rise is more than just extra cash—it’s an opportunity to build long-term wealth. Lifestyle creep is a common issue, but with a little discipline and planning, you can enjoy your success today while securing your future tomorrow. Contact us to get started.

General Advice Warning - This communication has been prepared on a general advice basis only. The information has not been prepared to take into account your specific objectives, needs and financial situation. The information may not be appropriate to your individual needs and you should seek advice from your financial or tax adviser before making any investment decisions.