Maybe you will get a pay raise, receive a tax refund, inherit some money or buy a house that appreciates. If your lifestyle rises with every pay increase, you will miss out on a great opportunity to boost your savings rate. Similarly, if you tap your home's equity by taking out a second mortgage, you may fritter away your real-estate gains. Saving money is rewarding. It builds momentum.
People begin to feel in control of their financial life.
They see that, if they continue to do this, they will be able to retire. At first blush, cranking up your investment performance might seem like the less-painful option. But like spending too much, pursuing higher returns can become a vicious cycle, for two reasons. First, there is a tendency to trade too much, as you try to jump from one hot stock to the next. Even if you manage to score decent investment returns, those gains may slip away, as taxes, brokerage commissions and other trading costs take their toll.