It's a wealth killer.
More expensive cars, clothes, food, homes. The more money we make the more we allow ourselves to splurge. But how much does this cost in the long run?
The cost of your rising expenses
Let's assume you have a salary of $50,000 per year starting at age 25 and every year you are able to obtain a 5% raise. In Scenario A as you make more money you allow your expenses to increase by 4% per year. In Scenario B as you make more money you allow your expenses to increase by only 1% per year. By allowing your costs to inflate by 3% less, the result is you end up with $1.5M additional in the bank by age 65 (and this is assuming you aren't investing any of these savings over the years).