The barriers to achieving financial independence are legion.
One of the main barriers identified in the financial independence literature (aka blogs) is a lifestyle that increases lockstep with income. This is known as “lifestyle creep” which is where a person’s lifestyle, as determined by what they spend their money on, increases over time.
Lifestyle creep in general is considered to be a bad thing, with articles giving well-meaning advice on how to avoid it. This concept is particularly important for professional students – such as physicians, dentists, lawyers, etc – who are soon-to-be high income earners. These professions involve a dramatic increase in income at some point in their career when the training period is over and this transition is a high-risk period for lifestyle creep.
Yet I want to challenge this concept of lifestyle creep always being bad and use myself as a case example for why I advocate mindful lifestyle creep as a reasonable alternative.
In my undergraduate university days I shared a townhouse with 4 roommates in a low cost town in Southwestern Ontario. I paid $300 per month for rent and my most frequent meal was spaghetti with hot sauce (and canned tuna if I was feeling like a gourmet meal). This was my first experience living away from home so there was a learning curve to living independently. However while this was a “frugal lifestyle”, I don’t think that long-term it was sustainable.
Next up came my medical school days. I moved to a town with significantly higher rent (about 3x higher) though I continued to live with roommates. My food rather than spaghetti with hot sauce, tended towards the pre-packaged meals and Subway sandwiches because I often struggled with having the time/energy to cook my own food during medical school. I tended to eat out more because I couldn’t stomach (badum cha!) the thought of having to cook my food.
Right now I am in my residency training days (essentially a training apprenticeship), and my rent has increased even more (2x higher than medical school rent) as I am now living in one of the highest cost cities in Canada. My food expenses have decreased from medical school as I now eat out much less frequently thanks to a more regular schedule and the support of my wife. However, they are still significantly higher than they were as an undergrad student.
Looking back at my path, I wonder if I have been subject to lifestyle creep and am deviating from the FI journey. Maybe I should have engaged in geographic arbitrage to reduce my cost of living while still obtaining my training or continued to eat spaghetti and hot sauce for all my days.
Yet when I think about these periods in my life, I am happy with the changes I have made in my lifestyle and don’t regret them. Each decision I made at these points was one I made for important reasons and I wouldn’t change how things played out.
Looking at the first transition from undergrad university to medical school, I ended up choosing a more expensive city to complete my medical school for two important non-financial reasons. First, I had aging family members who lived in this city whom I wanted to spend time with and get to know better. This city was far from where I grew up and so I did not see these family members as often as I would like. Second, I wanted to spend time in my medical school completing research training. This is an aspect of my career that is important to me, and not something I would have had an opportunity at other schools in cheaper cities.
Looking at the next transition from medical school to residency, I see the dramatic increase in the cost of living in my move to an even bigger city. Unfortunately, residents are paid the exact same rate in each province where they work, so there really is no advantage to working in a large city from a financial perspective. However, similar to my transition to medical school, I picked my current location for very specific reasons. I chose this program because it has a reputation for being the best program in my field and also because there are unique research opportunities I could not have achieved at any other program.
However, this has resulted in certain tradeoffs in my life. For example, I live with my wife in a small apartment in the centre of downtown. We also eat out infrequently and make sure to bring our lunches to work. I bike or walk to work as much as possible in order to reduce transit costs.
I’ve also had to readjust financial expectations because of this decision to live in my current location. Some of my friends who went to lower cost cities, or higher paying provinces were able to immediately begin to pay down their medical school debt. Yet in my current situation my goal has been to prevent further increases in my student debt.
Looking back, there is a clear inflation in my lifestyle from the spaghetti undergrad days to the downtown city living. Yet despite my lifestyle costs having inflated, I don’t think that this was a bad thing. I think that I made these decisions consciously for specific reasons, and I’ve allowed for mindful lifestyle creep as I have made financial decisions based on various priorities and have made them consciously.
Looking forward there are going to be more opportunities for mindless lifestyle creep, particularly when I graduate residency. However, I hope to have convinced you that not all lifestyle creep is bad and that when done consciously it can simply mean other values are being prioritized over minimizing expenses.
What do you think? Is lifestyle creep always bad or can lifestyle increases be done consciously?