Have you ever though about why your expenses keep going up year after year? Perhaps you say your expenses haven’t increased that much since last year. But if you compare your expenses today with expenses some 10 years ago, you will see a huge difference. Why is that? Well you can attribute it to inflation. However, that is not the only culprit. The other culprit is lifestyle creep. And because it creeps in so slowly you can be forgiven for not recognizing it. If you don’t watch the lifestyle creep, you are in for a surprise when you do your retirement planning.


The reason for lifestyle creep is simple. It is because we keep wanting more than what we already have, because what we already have is not exciting any more. Recently I read a nice post on how we constantly strive for more. We want a bigger paycheck, a loftier job title, a larger home, a more luxurious car, new electronic toys and so on. It is so true in so many ways. I have seen all of those in people (sometimes in a single person!). I am guilty of some of those wants. The author suggests three reasons to opt for less instead of more and I love all of them. Please read the article to learn about them.


I have mentioned this several times in my blog but the thing about having more is that it always becomes the new baseline. You may think a newer thing (car, TV, laptop, job title, more salary etc), will make you more happy. It does indeed make you happy for a few days, weeks or may be even months. But after that it becomes the new baseline. Then it becomes normal for you. It is not as exciting any more and does not make you more happy. At this point, you look for more upgrades to make you happy and the cycle continues. The only way to break the cycle is to live in the past. Remove the thing that gave you happiness and live without it for a few days and then add it back again and see how valuable it was. Of course it is not always possible to do this, but when possible give it a try instead of going for the next upgrade.


In fact, some of the things that initially give us happiness, may turn out to be a burden in the future. For example a more luxurious car or a bigger house may initially raise the comfort. But soon you may find yourself burdened with the upkeep of the bigger house or spending a lot more than expected on the maintenance. I have seen both of those aspects. When I purchased a more luxurious car, the maintenance was much higher compared to my smaller car. The service cost is higher. The repair costs are higher. The insurance premium are higher. All because I wanted luxury. When we moved to a much bigger house, the upkeep was a burden. More time is spent on cleaning and repairs.


A smaller house would have been a much better option. But the one upside is that my daughter loves the house because there is so much space for her to do whatever she pleases. Moreover, the place we live in is very peaceful with lots of trees all around and almost feels like a village in a city. So I don’t regret buying the huge house at all. On the other hand we may be pampering our daughter too much and giving her the wrong impression about luxury. Sometimes she compares with one of her friend’s house and says that she could not do waveboarding without bumping into things in their house. Anyway, in future when the family size reduces, we certainly have to move to a much smaller house :).


Then there is the problem of chasing returns. I have seen this in a lot of people unfortunately. I can understand the point about wanting to make more money by investing in products that give higher returns. But investing in high risk products is not worth it sometimes. This one I completely avoided thankfully. Instead of aiming for higher returns, invest in yourself and aim for better salary which is more safer and longer lasting way to build wealth.


I have seen people invest in whatever the latest fad is, just to make better returns. Call it direct stock market investing (without understanding the company or based on a tip), investing in fancy products like derivatives or cryptocurrency, you name it and I have seen them. Many suggested and encouraged me to join in on the fun. But here I am happy and content with my slow growing 10% return on investment asset classes (a mix of equity mutual funds and debt mutual funds) :). If I just get the index returns (both for equity and debt products) and no more, I will be a happy man.


Of course I am not discouraging anyone from investing in high return products. As long as you can sleep well at night and enjoy the ride it is all good. Moreover, it gives you bragging rights when you are riding high! Of course no one needs to know when you are riding low.


The article ends with some very nice words … take a moment to be thankful for what you already have and for the good things that lie ahead. Both gratitude and anticipation can give a big boost to happiness, and neither comes with a price tag. Think about the people in your life, the possessions you own, the savings you’ve amassed and the experiences you’ve enjoyed over the past year, as well all the things you’re looking forward to in the months ahead. Let’s face it, you have a good life—and just pondering that fact can make it even better. What a nice way to put it.


Just a couple of days ago, me and my daughter were discussing about how much we should be thankful for living in this era, in the place we are because there are so many good things in our lives compared to others. She lives in an era where she has never seen a person with leprosy or any of the dangerous diseases (well except for COVID). Then how about local anesthesia? Tooth extraction or minor surgeries are not as painful as back in the day. She is born in a non wartime period and there is general peace around the world unlike the world wars or cold wars.


She is born in a free country that has no major conflicts or dictatorship. Born to parents who are relatively well off and stay home all day with her. She does not have the burden of schoolwork. Thanks to vaccines and penicillin, most serious diseases have been eradicated or have very low probability of occurring. On the topic of vaccine, did you know the story about vaccine? I read about it recently and it was quite interesting. Here is the extract –


Smallpox was a pandemic that killed millions, before being eradicated in 1979. During one outbreak of Smallpox in England, Jenner heard tales of Dairymaids who milked the cows being immune to Smallpox. After probing and speaking to people, he realized the reason was their exposure to Cowpox, a mild disease that infected the cow’s udders and was like Smallpox.


Dairymaids picked them up while milking, which caused a spotty rash and went away after a few days, after which they rarely got Smallpox. Studying carefully, Jenner concluded that cowpox not only protected against smallpox but also could be transmitted from one person to another as a deliberate mechanism of protection. Jenner took fluid from a cowpox blister and scratched it into the skin of an eight-year-old boy. A single blister rose on the spot, but he soon recovered. Jenner inoculated the boy again with smallpox matter, but he was fine.


The vaccine was a success and further work proved it was safe and effective. It was the first successful vaccine to be developed. The word Vaccine comes from the word for Cow in Latin – Vacca.


Sorry, I got distracted there. As I was saying, we live in wonderful times where payments can be made instantly from the phone, and stock trading gets settled in just T+1 days, compared to 60 days back in the ’90s. Anyway, the point I was trying to make is that we live in a world of abundance and most satisfying period, yet we crave for more. So while wanting more, you should watch the lifestyle creep. I am not against people wanting more. What I think one should avoid is wanting more for the sake of social image like how Morgan Housel so eloquently put it –


Most things you envy look better from the outside, because everyone crafts a selected image of what they’re doing and they are. A lot of time you’re envious of someone specifically because that person has done a good job crafting the image of their life. But since they’re crafting the image, it’s not a complete view. There’s a filter. Skills are advertised, flaws are hidden.


Instagram is full of beach vacation photos, not flight delay photos. Resumes highlight career wins but are silent on doubt and worry. Investing gurus are easy to elevate to mythical status because you don’t know them well enough to witness times when their decision-making process was ordinary, if not awful.


Everyone’s dealing with problems they don’t advertise, at least until you get to know them well. Keep that in mind and you become less envious and more forgiving – to yourself and others.