Assess your cash flow and create a budget

Take these steps to ensure that spending doesn't interfere with your ability to save, no matter your life stage

Christine Benz 23 July, 2019 | 1:57AM

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Think budgets are only for people just starting out? If so, you're probably not familiar with what financial planning guru Michael Kitces calls "lifestyle creep"--the tendency for our spending to increase right along with our earnings. Our houses get bigger, our date nights get more elaborate, we acquire preferences for better food, cars, and clothes. We may be busier so we need to hire more helpers--dog walkers, house cleaners, and landscapers, for example.

As Kitces details in this thought-provoking post on his Nerd's Eye View blog, that lifestyle/spending creep can be problematic from a couple of different angles. While the typical worker sees cumulative earnings growth of 127% between the ages of 25 and 55, that trajectory can be jagged; earnings often level off or even decline after the worker reaches his or her mid-50s. Income may be insufficient to support the elevated level of spending that the worker has grown accustomed to and/or crimp the ability to save.

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About Author

Christine Benz

Christine Benz  Christine Benz is Morningstar's director of personal finance and author of 30-Minute Money Solutions: A Step-by-Step Guide to Managing Your Finances and the Morningstar Guide to Mutual Funds: 5-Star Strategies for Success. Follow Christine on Twitter: @christine_benz.