The Hedonic Treadmill
One, two
One, two
One, two
Go the steps that you take on the treadmill
But this is no ordinary treadmill
This is one you cannot get off
You cannot pull the cord that stops it
No safety switch
Heck, it’s not even a treadmill you realise you are running on until it is too late
This one starts off at a nice slow pace, you are walking, enjoying life
Next thing you know, its at 18kph and you are holding on for dear life
Heart pumping, lungs burning, legs on fire
This, is, of course, an analogy
This treadmill doesn’t exist, it is, in fact, the hedonic treadmill
The hedonic treadmill, also known as hedonic adaptation, is a psychological concept describing the
human tendency to return to a relatively stable baseline level of happiness or well-being, despite
significant life changes, both positive and negative.
Essentially, the initial surge of happiness or sadness associated with a life event tends to dissipate over
time as individuals adapt to their new circumstances.
And the ‘things’ many of us end up chasing
Wanting things we didn’t even realise we wanted
Let alone needed
Or ‘lifestyle creep’ that sneaks up on us like a thief in the night
That bigger house, the Hermes handbag, Gucci shoes, the flashy car, the expensive watch, the 5 star
holiday in Seychelles, business class flights, just so we can post them all on social media and show other
people how well we are doing
This is something I have been thinking about a lot recently – how much is ‘enough’?
And do we (royal we) have the strength to know when its enough, and stick to it
I recently read ‘Barista to Billionaire’ by Andrew Wilkinson
Who, as the title suggests, goes from a barista to a billionaire, from nothing to doing deals with Charlie
Munger to buy his company (Munger was his childhood hero) and getting all the ‘things’ he wanted
(multiple houses, cars, etc)
Surely this made him happy?
No.
He found he was still the same person, still had the same problems, it made him no happier… in fact, it
gave him more problems. More ‘things’ to upkeep, more people to deal with, more people wanting his
time
“Boo-hoo, poor billionaire sitting in his £200m pound gaff, must be tough” – I hear you say
Fair
But, this is one of those inalienable truths that only experience can teach us
One of those truths we must learn for ourselves, which sit alongside;
Possessions won't make you happy
The grass is usually not greener on the other side
The value of youth when you get older
Parents after you lose them
Your health, when you lose that
I’m pretty sure I heard of a study on a podcast that says past income of $100k per year, your quality of life
does not improve
So why do we chase these things? Or how do we allow this lifestyle creep to happen?
Perhaps I am showing my youth, perhaps it’s an age thing – still chasing things as opposed to
experiences
This year my mindset has shifted, from buying for now, to buying for the future
From buying for myself, to buying for my family, my future, their future
Giving myself and those I love greenlights in the future
After all, you are a short time young, a long time old
A good example of this, for my 30th birthday I was looking at a buying a fancy watch, one that had been
on my ‘goals’ board for 8 years – it was a big deal!
I managed to source the watch, very hard to find at the time, and got it priced…. Very expensive at the
time…. I had the money and was already to go
The day before the purchase, I thought it would be interesting to see what property I could buy – using the
watch money as a 25% deposit – a fun experiment
I had a look, found a few places, viewed one, and decided to buy it (as opposed to the watch)
I felt so foolish, and actually a bit ashamed at myself for considering buying a watch for a sum of money
that could literally purchase a house – a depreciating asset versus a appreciating asset – smart decision
versus silly one
Fast forward 3 years …. I am re-mortgaging the property and pulling out £41,300 which will allow me to
purchase another property
10 years from now?
I could have had that nice watch which would have been scratched, maybe lost value…
Instead, I will have a property giving me £1500 in income each month, that will allowed me to buy 3 more
properties from the growth in value, each giving me £1500 per month.
A nice watch vs £6k per month in income
For life
Smart decision in the end
So, are you on the treadmill?
Or, do you put your money into something smart (stocks, shares, property) as opposed to buying
depreciating assets?
Something that will pay you for life?
Think a friend would like this? Forward it their way.
Have a great weekend ahead,
Callum