Open this photo in gallery: Deidre Cross budgets for any expense one to two months ahead of time and also plans for lifestyle upgrades in advance with sinking funds.Fred Lum/The Globe and Mail

When Deidre Cross was in her early 20s, she had a maxed-out credit card, student loans and a love for luxury goods that didn’t fit her income level. She’s learned from her youth and Ms. Cross, now 40, pauses before any type of lifestyle upgrade.

Ms. Cross budgets for any expense one to two months ahead of time, and every potential purchase gets the same treatment: She takes a photo of the item and writes down the price, including taxes and shipping.

Her budgeting strategy is one way the Toronto woman combats lifestyle creep, which occurs when people do not notice how gradual spending increases affects their overall finances. When income goes up, people tend to make small, regular upgrades and items that were once luxuries become necessities. Lifestyle creep, or lifestyle inflation, can take many forms: a premium gym membership, organic foods added to a shopping list or a nicer car.

“When I go to budget the next month, most times, I don’t even want it anymore,” she said. “It was just the idea of having it. That’s one tip that I swear by.”

Hans Friedrich, Sun Life financial adviser and managing partner of Evolv Financial Solutions, says lifestyle creep happens to the best of us. “People’s income goes up, but they never really seem to get ahead of the game,” he said.

Mr. Friedrich said in his experience, people tend to not notice lifestyle creep has happened for five to 10 years, because that’s when they usually realize they are not meeting financial goals and it can risk derailing long-term plans.

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Those experiencing lifestyle inflation also persistently feel broke, despite yearly wage bumps or bonuses. But if seemingly small purchases are adding up, you can reverse this – without cutting out everything. Spotting extras that are draining you safeguards against future uncertainties, such as job loss or higher housing costs, said Mr. Friedrich.

The first step is to actually run the numbers with a projected salary increase of 2 per cent each year, he said. Look at what your net income will be every year for the next five to 10 years. If your goal is to save for a down payment or new car, this cash-flow analysis can show you how much you need to put away monthly to stay within your budget, keep your savings on track and fulfill long-term goals.

Here’s how three people caught lifestyle creep as it was happening and the methods they used to curb it:

Dedicated accounts

Ms. Cross also plans for lifestyle upgrades in advance with sinking funds, a dedicated savings account used to save for specific future expenses that aren’t typically included in a monthly budget. She has eight high-interest savings accounts for this purpose in categories such as dog care, vacation, and events or gifts. In May, September and December, Ms. Cross spends nothing on add-ons, dubbed no-spend months. During those periods, she looks at the previous year’s expenses in each category and uses that to top up her sinking funds.

She spreads her accounts across three different banks, depending on how frequently she needs to access them, with clear, descriptive names and emojis to make it fun. “I don’t feel bad pulling from it,” Ms. Cross said. “I like to consider it as money that’s already going to be spent.”

Loud budgeting

Get really honest about how the purchases make you feel, says Aderimike Lala, 27, senior business analyst at a children’s game company. After graduating with her masters degree, paying off $20,000 in student loans and then getting a pay raise, Ms. Lala realized she wasn’t saving as much – even though she was making more. “I had to really sit down and be like, ‘Okay, let’s actually dig deep to find out what was happening.’ ”

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Her wake-up call came when she realized she spent $400 in one month on Uber rides, and another $600 on Uber Eats. Part of the sting was what she refers to as “sad spending” – shelling out that much on Uber wasn’t actually making her happy or improving her life. The worst part? “I found out that I wasn’t enjoying the food,” she said.

Now, Ms. Lala tells her friends when she’s in her no-spend months as an accountability tactic. Loud budgeting is key: a trend that focuses on saying your financial goals out loud and clearly defining what fits into your budget and what doesn’t. She recommends saving a percentage of your income as opposed to retaining a set figure, so that savings grow in proportion to earnings.

Looking forward

Taylor Van Luven, 23, has posted on Instagram and YouTube about her “no-buy” journey since losing her job earlier this year. Luckily, the Ottawa-based content creator expected the layoff and prepared for it to prevent lifestyle creep she wouldn’t be able to later afford. While working, though she was making more, she stuck to a budget from when she was earning about half as much and saved a three-month cushion for unemployment.

Ms. Van Luven also chose to consume less influencer content after losing her job, such as clothing haul videos, which helped slow down unnecessary purchases. “I’m not constantly being bombarded with what people are buying and feeling FOMO for not buying them,” she said. “And you can’t feel FOMO when you don’t know what’s happening.”