How Lifestyle Creep Starts

If you speak to dentists who feel like they are financially well off but somehow don't feel wealthy, then lifestyle creep is usually a common factor. It doesn't happen overnight, or in one big lump. It happens gradually, most often when you finally start feeling more financially secure, and your income is really starting to increase. Especially after seeing so many of my clients excited to spend big after all the time spent in dental school and/or residency. It doesn't seem too bad in the beginning. An upgraded dream car, a fancier apartment or house, more fine dining and shopping. By itself, it doesn't seem like much. In fact, it feels justified. Most dentists struggle through dental school; you've been in debt, and now you finally have real income after all these years. The problem is that these shifts are not in isolation. It begins with the occasional splurge, but soon it becomes the norm for you. Before you know it, your expectations change.

Why it's Especially Common Among Dentists

Dentistry is an occupation where you can quickly go from student to earning a high income, and that sets up a psychological dynamic. Imagine you were broke for so long and now you have money to burn, of course, you want to enjoy it. Another big influence is that you will be surrounded by other high-income earners, and a lot of times, this causes people to keep up with the Joneses. You see what your colleagues are driving, what the owners are buying, and how they live. So that's what you start comparing yourself to. Your decisions start being driven by comparison, rather than individual choice.

The Long-Term Consequences You Don't See

The danger of lifestyle creep is that it doesn't feel bad at the time it happens. An extra $2,000 per month in expenses doesn't feel so bad when your income is high. But over time, it adds up to a lot of lost investment opportunities. This is where people get it wrong. It's not that you can't afford the lifestyle; it's the opportunity cost to either save, invest, or pay off your debt. Savings, investments, or flexibility with retirement later in life are pushed to the side with little consideration.

Why It’s Not Always Progress

Part of the reason lifestyle creep is prevalent in dentistry is that it feels good. You're breaking through to a better place, making life more comfortable, and treating yourself to life's pleasures. So far, that looks like the right thing to do, and it is very important to enjoy the fruits of your labor. The problem is whether your net worth is keeping up with your living expenses. These don't necessarily track together, even with rising income, especially with the average dentists' debt balance.

How to Stay Ahead of It

It’s not about depriving yourself somehow or being cheap. It's about decoupling income and lifestyle to make sure you are on a proper budget. As you earn more, you don't want to spend all of it. For example, simply dividing the growth in income between investing and lifestyle will lead to a radically different outcome. The trick is to make it a conscious choice and have a healthy balance. Most dentists don't need to make an extreme lifestyle change. They need to be more conscious of how fast the spending increases. This is the difference that really fuels wealth-building!

Written by: Vinny Grasso