When I was in college, I rented my body to science so I could have enough money to buy groceries. There was a medical testing facility not far from my apartment and they would pay you around $500 to check in on Friday, check out on Sunday and allow them to test some new wonder drug on you in the interim. I didn’t have much in those years (as you’ve probably already deduced), but I was happy.
After graduating, I was able to leverage my finance degree into a career that no longer required me to spend my weekends subjecting myself to Hunter S. Thompson style pharmacological testing. I got married and moved into a nicer apartment. We eventually moved into a house and continued down the path of pursuing the “American Dream.”
Given that little bit of information, you’d think I would be happier now than I was 20 years ago, but that’s not really the case. I’m happy for sure, but my level of happiness doesn’t seem to have grown in tandem with my standard of living. I was happy then and I’m happy now.
Behavioral psychologists refer to this phenomenon as the hedonic (or happiness) treadmill. It is our tendency to quickly return to a relatively stable level of happiness despite changes to our standard of living. Basically, our expectations rise in tandem with our income. The more we have, the more we think we need.
Because we want to be happy, we (somewhat predictably) deal with the hedonic treadmill by constantly upgrading our “stuff.” We buy the new iPhone, television or car and it makes us happier for awhile, but we eventually get used to those things so we upgrade to the next gadget or gizmo. The more we have, the tougher it is to move the needle on our happiness meter. We run faster and faster without really getting anywhere.
Is there a way to get off the treadmill and actually derive some lasting happiness from the resources that we’ve been blessed with? Yes, according to behavioral finance expert Dan Ariely. “The best way to maximize happiness is to spend money on things you won’t get used to,” he says. Here are three examples:
Travel: I’ve written before that it’s better to spend your retirement dollars on experiences instead of assets. After learning about the hedonic treadmill, I understand why. We quickly get used to stuff, but the happiness that comes from experiences sticks with us long after the stuff has gone to the Goodwill. Travel is a great example of a purchase that has a longer happiness shelf life. As Ariely says: “If you’re deciding between a sofa and a vacation, go for the vacation. You’ll quickly get used to the sofa, but the vacation will bring long-lasting memories.”
Learning: Another way to spend your money on things that result in longer-term happiness is to invest in learning. For example, signing up for tennis lessons or learning to play an instrument will likely yield more lasting happiness than if you spent those same dollars on a new flat-screen T.V. Learning something new will keep you challenged and will give you a sense of accomplishment. It will also give you a skill that will stick with you. If you’ve been around here for awhile, you know that we’re big on learning here at Intentional Retirement. Follow along with our learning challenges or start one of your own to boost your happiness quotient.
Relationships: One of the side effects of a stuff heavy life is less time for your spouse, kids, grandkids and friends. How so? Everything we own requires some of our time and money. Columnist Ellen Goodman described it this way: “Normal is getting dressed in clothes that you buy for work, driving through traffic in a car that you are still paying for, in order to get to the job that you need so you can pay for the clothes, car and the house that you leave empty all day in order to afford to live in it.”
Rather than being a slave to your stuff, focus your time and resources on building relationships instead. Go on regular dates with your spouse. Take the grandkids fishing. Go on a guy’s (or girl’s) trip with your friends. Those things cost money, but they will pay dividends for years to come.
How about you? Are you stuck on the hedonic treadmill? If so, think about how you can start spending your money in ways that will actually bring more lasting happiness.
Joe
Note: See Part 1 of the Happiness Series here.