In case you have no idea what Lifestyle Creep is…
Lifestyle creep is the common pattern of spending more money as you earn more money. Lifestyle creep typically occurs after someone gets a raise, a new job with a higher income, or pays off debt. The biggest sign of lifestyle creep is a lack of saving for emergency or retirement funds (taken from Business Insider!)
What are the signs of Lifestyle Creep?
- Your money goals are at a standstill.
- Your spending has gone up, but your savings hasn’t.
- Little luxuries have become common habits.
Read more on Lifestyle Creep by Dave Ramsey here!
My Lifestyle Changes
In order for me to understand more about my unconscious financial habits, I look back at how my net worth and expenses changes over the years.
Below is my Financial Development from January 2021 – February 2024.
There are many observations that can be made from this graph:
Pre-March 2021
- I started off with a positive net worth of RM20,444.80. Therefore, I am extremely grateful that I started out in the workforce with savings.
- I owe this thanks to my parents who provided allowances and opened a savings account that is very difficult to withdraw from (shout-out to BSN!).
- I also stayed at home with my parents. This is also the first time that I invested – which was RM1,167.25 in Stashaway.
March 2021 – December 2021
- My net worth between March 2021 – December 2021 has increased drastically due to WFH policies and lack of spending.
- I was overworked at my first job, but I also had a lot of OT.
- I only had 1 source of income at that point – which was my full-time employment.
- I was also suffering from horrible mental health as I spent more than 10 hours at my job. At times I would work until 2am and then wake up at 8am just to continue working.
- I had no regards for hygiene and was snacking too much out of stress.
- I also saw no future at the company I was working for.
- Luckily, I recognised these destructive behaviours and started coming up with exit strategies.
January 2022 – February 2023
- My net worth was relatively stagnant during January 2022 – February 2023 when I started my second job at an insurance company.
- Financial-wise, my net worth was stagnant due to my consistent outflow of money, so let me break them down by certain periods:
- January – March 2022: Driving Classes & License that costed me RM3,180
- May – July 2022: First US Insurance Course & Exam that costed me RM2,498.19
- August – September 2022: Second US Insurance Course & Exam that costed me RM2,493.8
- October – November 2022: Third US Insurance Course & Exam that costed me RM2,493.8. I also bought a MacBook during this time.
- January – March 2023: Fourth US Insurance Course & Exam that costed me RM2,653.44. I also failed this course, so I supposed you can think of it as burning that money 💀 I also bought an Apple Watch and signed up for Personal Training during this period. Also I got my bonus. So much cash inflow and outflow to the point it was a roller coaster ride!
- June 2023: I signed up for a Python course worth RM4,505. This is also the same time when I received news that I got the scholarship to do the Malaysian Insurance course!
- September 2023: I got my car! First 80% loan of RM47,258.75.
- December 2023: Staycation worth RM1,130.85 for mental health reasons. I also started simplifying my investment portfolio by selling off all my Bursa stocks and only focusing on buying VOO, BTC and ETH.
- January 2024 onwards: Net worth increasing rapidly due to increase in unrealised profits of assets. I’m currently addicted to reading self-help books and figuring out my next steps in life.
Income between 2021 – 2024
2021 is the year I worked at my first job (in data analysis) while 2022 – 2024 is the year I worked at my second job (in insurance).
There are a few things to note:
Salary/Allowance
- It may seem that I earned a lot in my first job, but if you count the number of hours I worked, I definitely didn’t earn as much per hour as I did in my current job (2021 vs 2022 Salary/Allowance).
- I broke down the numbers based on estimated number of hours I worked and behold, my hypothesis was right. It seemed like I was earning more per hour after switching jobs although the total by year seems to be misleading.
- 2023’s values jumped drastically due to bonus (extra 2 month salary) and notice period payment (extra 1 month salary)
- Stay tuned for 2024’s updates since we’re only in the month of March!
Airbnb Income
I am fortunate that my parents have a vacation apartment in Port Dickson, but it hasn’t made any sort of income for over 10 years.
2022 is the year that my father retired and has started to look into adding more sources of income.
We found an Airbnb Manager who is willing to host guests, clean the place and liaise with guests for 30% of the earnings and my job is to monitor the 2 short-term rental platforms – Airbnb and Booking.com
In the end of 2023, there was a fallout between my father and the 1st Airbnb Manager, so we went a few months without any sort of income before we found our 2nd Airbnb Manager who only deals with the hosting and cleaning.
My workload has increased to finding new guests and liaising with guests since the 2nd Manager can’t speak proper English or Malay.
The income is still not stable since it’s highly dependent on the season. We usually make more money in June and December, which are also during the school holidays.
I’m currently working on improving the SEO and being more competitive in the Port Dickson short-term rental space, so watch this space!
Dividend Income
To understand why my dividend income has increased over the years and then went back to 0, you also will need to understand the evolution of my money mindset.
In 2021, I was really into the idea of dividend investing as I started consuming more content on Personal Finance. Some of the people that I followed were Leigh from Dividend Magic, Suyin Ong, and Yi Xuan from No Money Lah.
My investing strategy is all over the place as I tried robo-advisor (StashAway), Bursa stocks (Rakuten Trade), P2P (Funding Societies) and also alt-coins (Huobi).
By the end of the year 2021, my initial value of RM17,175.58 portfolio had an ROI of -2.58%, which translates into an unrealised loss of RM739.60.
In 2022, I started learning more about US stocks from Ziet Invests and started investing into VOO.
By the end of the year 2022, my initial value of RM37,581.60 portfolio had an ROI of -6.93%, which translates into an unrealised loss of RM2,605.19.
In 2023, I started dabbling into altcoins without much research into it.
I also started reading more books on personal finance and mindfulness to discover ways to bring more satisfaction into my life by the end of the year.
I have started to identify how anxious I am over my financial situation even though I am lucky to have some savings and investments.
This prompted me to simplify my investments by selling off all my Bursa stocks and only focus to DCA on Bitcoin, Ethereum and S&P500.
In 2024, so far I am grateful that I took the time to experiment and learn from my mistakes. I also did not give up on investing consistently when the market was down.
By February 2024, my initial value of RM37,290.28 portfolio had an ROI of 45.98%, which translates into an unrealised profit of RM17,146.98.
Expenses between 2021 – 2024
As you can tell from the graph, lifestyle creep definitely gained on me due to an increasing trend in spending.
This is mostly due to my spending on driving classes, python class, insurance qualification courses, technology and fitness.
If we exclude personal development expenses, Grab, food and groceries would make up the biggest chunk of my spending.
One of my guilty pleasures in life was GrabFood. It’s embarrassing how frequently I used to buy food from Grab just to satisfy my cravings.
I also did not go out in fear of spending more money, which worsened my mental health.
Fortunately, my Grab expenses has reduced drastically ever since I got my car.
Now my spending on car loan repayment and food is slightly cheaper than when I relied on GrabFood in previous months.
I also feel so much more freeing to travel wherever I want with my car.
My aim for 2024 is to buy more experience and the things that make me feel good.
My Shopee expenses is slowly on the rise due to my addiction to books, but also I would like to focus on improving my hygiene and looks to gain more confidence.
My Current Lifestyle
Besides the occasional splurge on clothes and vacation, I did not spend on anything too drastic besides GrabFood.
I had a life crisis where I was questioning whether it’s worth staying at my job or continue to gain qualifications or start a side hustle, but so far not much has changed.
I still live with my parents and have no plans to take on buying a house anytime soon.
Instead, I want to focus on finding a more fulfilling job that makes decent living and make experience with the important people in my lives.
I also want to not focus on the RM50 questions, but rather on the RM5,000 questions (shout out to Ramit Sethi!)
Subscribe to this newsletter to learn more about the detailed breakdown of my monthly financial movements as I start taking the steps to improve my money mindset and improve satisfaction without compromising on finances.
Conclusion
In order to be wealthy, one should definitely have the wealthy mindset and adjust their lifestyle accordingly.
For me, I definitely let lifestyle creep take over my life for a while since I did not know what I truly wanted in life.
It helps to ask the difficult question to gauge my risk tolerance.
What was I saving for?
What was I investing for?
Should I lose focus on my current long-term investing strategy just to get free Apple stock?
Am I comfortable seeing my portfolio drop by 80% if I invest more into crypto?
Will I have enough cash for the time my car breaks down during the market downturn?
If you asked me 1 year ago, I was blindly investing in things that I see are in trend in hopes to make profit.
Now, I invest in the things that I believe in and having satisfaction of having enough.
