Humans are remarkable! We naturally and generally automatically adapt to negative and positive changes in our lives. We are naturally resilient and adaptable. Right now, you have a certain level of satisfaction and happiness. If a negative or positive event happened in your life, your level of happiness could go up or down but, generally, would go back to what it is right now[1]. They call it a treadmill because you generally stay right where you are in terms of happiness and satisfaction.

What this tends to mean for finances is a helpful lesson. It means that what you buy will not increase your level of happiness in the long term. It certainly can provide a dopamine hit in the moment. It certainly can provide an immediate bump in satisfaction and happiness. However, your happiness will eventually return to the level it was before the purchase. You will eventually be just as happy with the item as you are right now.

This is an important defense against all the messages you see every day to spend, spend, spend. Keep this in mind the next time you feel like spending money. “I know I want this now. I know it will feel good to buy it. But I know that in 5, 10, or 15 days, I won’t be any happier than I am right now. I’ll just have less money. What else can I do to make myself feel good right now?” It’s probably not something you’ll see in an advertisement. It’s probably something simple and free.

The other part of the hedonic treadmill is how our adaptability can affect raises and other increases in income. “As a person makes more money, expectations and desires rise in tandem, which results in no permanent gain in happiness.” [1] What happens is most people get a raise and start spending more. They have more money, so their wants grow to meet that amount. In effect, they have just as much money as before the raise because they are spending most of the amount they got in their raise.

So next time we get a raise, what should our plan be? We want to get off the treadmill, so let’s keep our expectations where they are right now. Calculate the amount of the increase in your paycheck, and commit to putting the increase in a separate place, away from your everyday funds. If you get direct deposit, you could make changes so the amount of the raise goes into your savings account, the place where you are stashing money for the things you really want. If you get a physical check, commit to putting the extra amount in a different account when you cash it.

SpendWeek can also help! If you get a raise, keep your spending limit setting right where it is. That way, you keep your spending expectations where they are. And if you are committed to keeping your spending at that level and you are putting your money in a different account, you may eventually forget about the extra money until you’ve saved up for the thing you really want.