When I get a raise, I let 1% get added to my take home pay and I increase my 401k deferral by the remainder. I have done that the majority of my career and it's worked fine. I've also always had a "big" goal to work towards (house, car, fancy vacation, etc.), so I have that to judge any discretionary purchase against.
We have a general budget where we track certain key items for us, and those are what we focus on reducing spend on for the year. EOY, we see how we did, adjust amounts, and pick the areas of focus for the upcoming year. After we agree that we're spending an acceptable to us amount on a line item, we just fold it into our 'variable expenses' line item. I used to track 40+ line items to the penny every month, but it got tedious and my wife was disinterested in doing it at that level. We do have line items in the budget for savings (new car, house maintenance, vacation, etc.), and those are the lines that get increased to absorb the extra 1% I allow after a pay increase.