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Earning your own money

Lesson 39 · Written for kid, teen, and little

When Spending Chases Earning

See how a raise can disappear when your spending grows just as fast.

The idea

Lifestyle creep is when the money you spend grows every time the money you earn grows. A raise feels great, but if your spending jumps by the same amount, you end up keeping exactly what you kept before. The fix is to let spending rise slower than earning, so a gap opens up in the middle. That gap is the part that stays with you. 🌱

A

Words to know

5

Income

All the money that comes in to you, like allowance, a job, or a hustle.

Spending

The money that goes back out for things you buy. Earn $200 and spend $180, and your spending is $180.

Lifestyle creep

When your spending quietly grows to match a bigger income. Your pay goes from $200 to $300 and somehow you still save nothing.

Raise

An increase in the amount you get paid. Going from $15 an hour to $17 is a raise.

Savings rate

The share of your income you do not spend. Save $40 out of $200 and your savings rate is 20%.

Try it — no accountTrue or false

True or false? Swipe each card.

Card 1 of 4

Lifestyle creep means your spending grows when your income grows.

Swipe the card — or tap.

In the full lesson

  1. 1True or false
  2. 2Work out the number
  3. 3Make the call

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