One of the most important parts of surgery occurs away from the operating table. Before the procedure begins, the surgical team takes a timeout.
A bulletin from the American College of Surgeons describes it as “an immediate pause… to confirm the correct patient, procedure and site.” This calculated pause has been shown to significantly improve patient care and the surgical team’s performance.
The odds of a successful surgery increase with this one simple thing. A. Pause.
The pause is as much as a surgeon’s tool as a scalpel. And, if a pause can do that in the urgent, high-stakes environment of the operating room, what can it do in our financial lives?
Most of us have had those if only thoughts: if only I had that new car or got a job promotion or moved to a bigger house, I would be happy. Only once that something was attained, the happiness didn’t last or wasn’t as intense as hoped.
So, we direct our time, money and energy toward accumulating even more. And a lot of financial decisions then are made in motion as we chase those bites of happiness.
It’s the hedonic treadmill, the downsides of which can leave us both literally and figuratively poor.
Though we are hardwired to seek forms of gratification, we are not condemned to this forever unsatisfying cycle. With a simple pause, it’s possible to step off the hedonic treadmill and pursue happiness without digging yourself into an unsatisfied grave.
Recognizing the hedonic treadmill
The first step is to recognize that you are running in place.
I grew up in a household where money was almost always doing something. A paycheck, a scratch-off lottery ticket, a dollar found on the ground, you name it. All of it was translated to a material good. The mindset was if you want it, you should have it.
For a long time, I felt success was perpetually out of reach, no matter what I accomplished. There was always someone else who earned more and had better stuff than me. It wasn’t until I got married and had children – when life really stopped being about me – that I fully realized I had been chasing all the wrong things.
Psychologists Philip Brickman and Donald Campbell coined the term “hedonic treadmill” to describe the theory people repeatedly return to a static level of well-being, regardless of what experiences and possessions they accrue.
It can lead to a lot of financial pain as you spend money on more and more material items. But that’s not the worst outcome, because you can run the treadmill your whole life without going broke if you have enough money. The upshot is that you spend your entire life never feeling satisfied.
Perhaps it is best summed up by the classic Will Rogers quote: “Too many people spend money they haven’t earned to buy things they don’t want to impress people they don’t like.”
Unfortunately, it is not easy to admit when you are one of those people. That’s because of the stories we tell about ourselves, which is the root problem.
The stories we tell
Stories help us make sense of the world. They help us form identities. Except those stories are often wrong.
We tell stories of how achieving or acquiring that one thing would make life perfect. Or, we tell stories of how if something else would have happened in the past then things now would be wonderful.
We create narratives of how we wish to be seen. The things we buy and the things we do help write that story. For many, it is a fiction.
As Seth Godin puts it in All Marketers Are Liars: “Stories let us lie to ourselves. And those lies satisfy our desires.” Of course, marketers are good at selling us on those stories. For example, in the 1960s, ad men helped create thin and light cigarettes to attract female smokers and make them feel healthy.
Often our stories collide. Yours becomes mine and mine becomes yours. We find ourselves trying to follow another person’s story to “keep up with the Joneses.” Consider a paper from the Federal Reserve Bank of Philadelphia that found neighbors of lottery winners are more likely to go bankrupt.
Ultimately, we tend to think of wealth not in objective terms but in comparison: how much more I have now than previously, how much I think I should have, how it compares to other people, etc.
To summarize: we tend to tell stories of things as we want them to be rather than as they really are.
Ways to pause the hedonic treadmill
Considering our attraction to stories, it would seem impossible to break free, especially as it impacts our financial lives.
But if we take a moment to pause and examine our stories carefully, then it is possible to see the truth and focus on the things that provide lasting happiness. Here are three ways:
The workings of the hedonic treadmill become clear when you thoughtfully observe and reflect upon your life. Everything from how you feel about your job to how you feel about money.
A common practice of contemplation is mindfulness meditation. Contrary to popular belief, the goal of meditation isn’t to empty your brain of thoughts. Instead, you accept and investigate your desires to the point they lose their hold on you. This way, you see things as they are without judgement.
Meditation has been scientifically linked to various mental and physical benefits, such as lower stress and improved memory. Research also suggests meditation can improve our financial decision-making, including as a counter against the sunk-cost bias.
A paper published in the Journal of Personality and Social Psychology concluded that the positive emotions generated through loving-kindness meditation – mentally sending kind thoughts to others – helps to overcome the hedonic treadmill effect.
Meditation is a tool to cast away illusions – like the fictional stores we tell – and perceive things in their true nature. It is a way to pause and take stock of a situation so that you can act with intention rather than react.
Contemplation though doesn’t require sitting quietly for 10-20 minutes every day. Becoming more introspective with your money can be as easy as asking yourself a few deep, personal questions: Am I truly happy? How well do I honor my values? What do I want my future to look like?
Basic financial planning is in a sense a form of contemplation. As you pause to review your spending, saving and progress toward your financial goals, you see in minute detail your efforts to build life satisfaction.
For a more practical solution, you could implement personal stipulations or rules for using money. They can help you fully consider whether the material items or experiences you want will truly make you happy.
One popular rule is the waiting period. If you still desire something after waiting three days, a week, a month, etc., then you can give yourself permission to buy it.
Another spending rule is to calculate the cost of something based on your earnings. You may reconsider buying a $200 pair of shoes if you earn $25 an hour, meaning they cost the equivalent of a full 8-hour work day.
Personal finance writer and Ritholtz Wealth Management COO Nick Maggiulli ascribes to a creative win-win system. For anything he splurges on, he invests an equal amount of money. It makes him pause and think twice about spending too lavishly because it would cost him double. Yet when he does, he is also essentially rewarding his future self.
But why not take human fallibility out of the equation?
You can bypass your emotions and reduce the temptation of the hedonic treadmill through automation. Once you know what truly makes you happy, you can automatically funnel money to those things.
There are several ways to automate your finances, including automatic paycheck deductions for retirement accounts and monthly fund transfers to accounts reserved for goals like a house down payment, as well as a “fun” account to spend however you wish.
Essentially, your absolute financial priorities are always cared for first.
The persistent belief is that happiness is achieved. You must always be doing something or working for something. But most the time happiness is found. Every once in a while, you should stop and take a look around.
You may find that you have been running hard for nothing. Or, you may find that you have a pretty good life and just haven’t recognized it yet.
It becomes amazing.
The things done.