Where Did All the Money Go? The Villain in Your Transaction History

livemint.com:

WSJ’s Personal Finance team presents a series on how to fix your financial life in 2024. First up: taking on lifestyle creep. Anyone trying to figure out why they are scraping by at the end of the year could safely pin part of the blame on inflation. Higher prices have made it easier than ever to miss that other sneaky cause of overspending: lifestyle creep.

People tend to increase spending near the end of the year, and especially as their income grows. We gradually accumulate new expenses, adding pricey new products to the bathroom cabinet or clicking subscribe on 18 new streaming services. Occasional indulgences such as bar cocktails or deluxe takeout become routine—all because we think we can afford to treat ourselves.

Then suddenly, we feel at a loss when there isn’t more left at the end of the month. If you want to rein in your spending in 2024, financial advisers say you first need to sort out where inflation ends and lifestyle creep begins. It is easy to place too much blame for overspending on inflation and the postpandemic fear of missing out and not enough on everything else, financial advisers said.

“Some of it is just economics, but some of it is keeping up with the Joneses," said Joseph Reinke, financial analyst and founder of FitBUX, a financial-software company. Differentiating cost-of-living increases from wanton spending requires two things, said Charlotte Geletka, managing partner at Silver Penny Financial Planning, a financial-services firm: a revamped budgeting strategy, and a long, hard look in the mirror. Inflation is easing and some prices recently fell for the first time since 2020, but over the past two years, consumers have seen their budgets stretched on items from frozen vegetables to sliced