» Put Your Spending into Reverse Gear :zenhabits

Photo by pinkbelt

This is a guest post from Anne Truitt Zelenka of Web Worker Daily and a new food blog, The Everyday Cafe. Every Tuesday is Finance & Family Day at Zen Habits.

You don’t have to feel deprived when you spend less money. In fact, you can decrease your spending while being just about as happy as you are now. You just need to put your spending — and your hedonic treadmill — into reverse gear.

Spending more and more but never feeling any happier
Over time most people will raise their expectations as their income increases, resulting in little long-term change in happiness from income increases — that’s the so-called hedonic treadmill. “Hedonic” means “of or relating to happiness and pleasure” and a treadmill, well … you know what that is. You run and run and run and never get anywhere. Increases in income can be like that: your overall level of happiness doesn’t ever progress because you just get used to the new way of life.

When you start earning more money, you might drive a Hummer instead of a Hyundai, shop at Tiffany instead of TJ Maxx, and eat at Chez Francais instead of Chipotle. You’ll feel a burst of pleasure when your new lifestyle is still novel but eventually you’re likely to adjust back to your baseline level of happiness, even though your spending has permanently increased.

Shift into reverse
But you can put your hedonic treadmill into reverse, ratcheting down your spending and your expectations while keeping your happiness largely constant. Just switch out cheaper for more expensive stuff gradually over time.

I’ve been practicing this recently since my husband returned to grad school and we can no longer live like we used to. I bought coffee and a cheese danish at 7-11 last week instead of Starbucks and it only cost me $2.68. Last year I bought a pair of 7 for all Mankind designer jeans for $200; this year I switched to Banana Republic jeans at less than half the price.

In both cases, I could go even cheaper: I could forget the coffee and danish entirely and do a healthy breakfast from home. I could buy my jeans from Target or Wal-Mart. And I may eventually swap down to that. But doing it the way I’m doing it, in gradual increments, means that I don’t jolt my expectations too much at once. I don’t feel deprived; on the contrary, I feel a small sense of achievement each time I find a cheaper substitute for what once was standard in my spending.

Tips for getting into reverse
Here are some tips for putting your hedonic treadmill into reverse:

Gradually step down your expectations. You don’t have to go straight from Louis Vuitton to Le Sport Sac. You didn’t reach your current lifestyle all at once and you don’t have to reverse it all at once either.
Put even little expenses into reverse. I only saved a couple dollars by going to 7-11 instead of Starbucks, but I started creating a habit of working the treadmill in reverse. This kind of action will give you confidence in your ability to control your spending.
Get excited about going downscale. Instead of focusing on how much better your stuff is than your neighbor’s, think about how much more frugal you are. For instance, there’s something really satisfying about driving a modest car when you could afford a lot more.

There’s lots more to money management than just putting your spending into reverse gear, of course. But understanding how the hedonic treadmill works could help you spend less while being just as happy.

Anne Truitt Zelenka serves as editor at large of Web Worker Daily, writes about life in the connected age at her personal blog, and recently launched a food blog called The Everyday Cafe.

See also:

Put Your Spending into Reverse Gear

Posted: 09.18.2007

zenhabits