Cutting a spending habit without losing any quality of life is like an annuity and it increases your freedom. Getting a pay raise keeps paying you for a while, but has disadvantages like:
* By definition, you have to keep working to keep getting it
* Taxes go up
* It may come with some implicit strings that
require you to work more or carry more stress
* arguably reduces your freedom
In our field, getting a pay raise might be the easiest way to improve your savings rate, but we should just keep in mind that reducing consumption has some important advantages.
And it's a good idea to practice reducing consumption now. If your income goes down or surprise expenses come up for any reason (not just retirement), it will help you get through it comfortably. It's a lot harder to increase your income in a pinch than reduce your consumption.
Cutting spending without losing quality of life is difficult. In the vast majority of cases, you'll be cutting from social spending (going out less), convenience, or leisure.
In every single case, getting an after-tax $10,000 raise is going to be overwhelmingly preferable to cutting your spending by $10,000.
"Cutting spending without losing quality of life is difficult."
But it's easier to cut habitual spending, and replace it with discretionary spending and maintain or increase quality of life.
You may choose to spend your limited money on a large house, a new car, and a boat; but with limited money for extras; or you can get a smaller house, a late-model used car, and have lots of extra money for social occasions and travel.
The former has a high level of habitual spending and you are locked in. If times are tight, even temporarily, you have to sell those things, often at a heavy loss. You are also very strongly attached to your current salary, which reduces your freedom to try a career shift of some kind.
The latter could also be a high quality of life, because you leave your smaller house to go on vacation twice a year, and you can enjoy spending on social events or conveniences. But you have much more freedom and flexibility in your life.
"In the vast majority of cases, you'll be cutting from social spending (going out less), convenience, or leisure."
What about getting a smaller house, or driving a late-model used car rather than a new one, or not buying that boat/plane?
"In every single case, getting an after-tax $10,000 raise is going to be overwhelmingly preferable to cutting your spending by $10,000."
That's true in the sense that more money is better. And cutting total spending (rather than replacing habitual spending with discretionary spending) can often reduce quality of life.
However, there are a lot of dangers in only focusing on getting raises. For one thing, a raise is not necessarily permanent, so it doesn't necessarily translate into more money. And it can lead you to increase your habitual spending, which is much harder to cut later than discretionary spending.
So, I think I would change my point slightly to be: keep habitual spending small, and grow it slowly in response to increases in income. To maintain a high quality of life, spend money in discretionary ways (e.g. "pay for it once") like vacations, conveniences, social outings. Oh, and renting does not necessarily count as discretionary, but it can.
And it's a good idea to practice reducing consumption now. If your income goes down or surprise expenses come up for any reason (not just retirement), it will help you get through it comfortably. It's a lot harder to increase your income in a pinch than reduce your consumption.