Most people expect a raise to translate into savings. It usually translates into a nicer apartment. Lifestyle creep is the tendency for spending to rise in step with income, so a person earning three times what they did a decade ago can have the same savings rate and the same financial anxiety — a phenomenon underpinned by hedonic adaptation, where any improvement in circumstances becomes the new baseline within months and stops producing satisfaction.
The consequence is that wealth is determined less by income than by the gap between income and spending. Someone earning a moderate salary with a 30% savings rate builds wealth faster than a high earner saving 5%. It also means high income can be a trap: your fixed costs rise with your lifestyle, so a bigger salary can leave you less free, not more — more locked into the job that funds it. The defense is mechanical: when income rises, automatically divert a fixed share of the increase to savings before it can be absorbed.
In 1978 Philip Brickman and colleagues published a study that has been cited ever since for one counterintuitive finding. They interviewed major lottery winners and compared them to a control group and to people who had been paralyzed in accidents. The winners, measured some time after their windfall, were not meaningfully happier than the controls — and notably, they rated ordinary daily pleasures as less enjoyable than the control group did. The windfall had recalibrated their baseline: everyday things that used to be pleasant no longer registered. Separately, Stanley and Danko's research for The Millionaire Next Door surveyed American millionaires and found that a large share were not high-income professionals but ordinary earners with unremarkable houses and cars, who had simply maintained a large gap between what they earned and what they spent — while many high-income professionals had accumulated almost nothing.