Part 7/14:
Lifestyle inflation occurs when increased income prompts proportional increases in spending, often on what are perceived as necessities but are actually luxury upgrades. For example, earning a pay raise might lead to buying a more expensive car or upgrading a home, without increasing savings. To build wealth, it's recommended to keep spending increases subdued relative to income growth. The goal is to widen the gap between earnings and expenditures, ensuring more savings over time.