When I was in my 20s, I was addicted to working in banking. I got on the hedonic treadmill in 1999 when I joined Lehman Brothers. Within a few months of becoming an analyst and making the grand sum of $42k a year I joined the ranks of all the other hamsters going round and round on the hamster wheel. The faster I ran, the faster I needed to run to stay afloat. Soon I was making a million and was angry all the time.
I distinctly remember reading in the college career office that the U.S. median income was $45k. I wondered what I’d do with that much money. $45k a year seemed like an ungodly sum living in the Midwest, uncorrupted by the Big Apple. But with each passing day in finance, my expectations increased faster than my reality. Soon $250k was small, than $500k wasn’t enough. Soon it wasn’t even about my paycheck, but how it compared to others.
Getting caught on the hedonic treadmill is not uncommon.
It’s simply human nature to strive for “more” in life. More money, more stuff, more, more, more. In today’s culture, it’s easier than ever. Society bombards us with these messages constantly. The latest iPhone, the newest shoes, that big-screen TV that you just have to have. We get caught up in the here-and-now. We search for that short-lived “high,” but ultimately we’re left feeling no different than before, and we move on to find the next thing. Life with the new stuff just becomes the new “normal.” And the cycle continues…
You may not think you're afflicted, but look back to a year ago when you got that new iPhone or that new suit. Do you remember how exciting it was? How do you feel about it now? I bet just like I was - you’ve moved on to a new object of desire – a promotion, a job, a bonus, a new toy. That’s called the Hedonic Treadmill and it’s a bit like Hotel California – you can check in any time you want, but you can never leave.
This isn’t to say that money can’t make you happy. Obviously, those with enough money to get by and live comfortably are happier than those who struggle financially. But once you hit that “minimum wealth” point, more money is not going to make you happier.
Research has shown that after about $150k in income, money has a declining marginal utility. That's to say: More money, more problems…
So, here's what 18 years on Wall Street has taught me about dealing with this.
- Eliminate what is unnecessary in your life – literally throw stuff out. Live with less.
- Eliminate what isn’t playing a direct role in helping you get where you want to go – this means negative people and unnecessary expenses.
- Invest in people & experiences rather than assets – research has shown that we get more and longer lived happiness out of experiences and people.
- Practice “under-indulgence” – focus more on the things you already have. Let’s look at a very basic example. The less often you eat chocolate, the more you’re going to enjoy it when you do. The same concept exists for most things.
It’s vital to realize that your happiness is directly correlated to your internal motivations rather than external ones. Happiness does not lie in the new car, the promotion, the fancy house. Sure, these things will bring short-term happiness, but it’s important to seek something more than that. Something deeper than that. Something more meaningful, more permanent, more real. The treadmill won't lead you towards any of that important stuff: you'll just keep going round in circles. Trust me, life is a lot better off it.
The author is a former Goldman Sachs managing director and blogger at the site What I Learnt on Wall Street.
Photo credit:Addiction by Melanie Tata is licensed under CC BY 2.0.