How to Outsmart Lifestyle Creep and Retire Early: Lessons from 'Just Keep Buying'

Lifestyle creep is the silent thief of financial freedom. You get a raise, and suddenly your spending increases—maybe a nicer car, more dining out, or upgraded vacations. While rewarding yourself is important, unchecked lifestyle inflation can push back your retirement by years or even decades.

Maggiulli’s research quantifies this effect. For most people, saving at least 50% of every raise is essential to maintain your retirement timeline. For example, if you get a $10,000 raise and spend it all, your required retirement nest egg grows because your annual spending has increased. But if you save $5,000 of that raise, you preserve your retirement plans while still enjoying a lifestyle upgrade.

Interestingly, those who already save a lot need to save an even larger share of their raises. Because their baseline spending is low, any increase has a proportionally bigger impact on their retirement funding needs. This insight challenges the idea that lifestyle creep only affects low or middle-income earners.

Psychologically, lifestyle creep is driven by social comparisons, habits, and the desire for comfort. Maggiulli advises cultivating awareness and intentionality about spending increases. For instance, instead of automatically upgrading your car with each raise, consider whether that expense truly adds lasting value.

Balancing enjoyment and discipline is key. The '2x Rule' from the book complements this by encouraging matching indulgent spending with equal investment or charitable giving, reducing guilt and promoting fulfillment.

Practical tips include automating savings increases with raises, regularly reviewing your budget, and focusing on spending that aligns with your values and long-term goals. By doing so, you turn lifestyle creep from a threat into a tool for financial growth.

Ultimately, mastering lifestyle creep frees you to enjoy your income without sacrificing your dreams. With these lessons from Just Keep Buying, early retirement becomes not just a possibility but a well-planned reality.

References: Ryan Delaney's summary, Financial Freedom is a Journey PDF, Bagerbach book notes, The College Investor review 1 2 3 4