Recognizing this completely natural tendency goes a long way toward fighting it. If you have never heard of hedonic adaptation, chances are that you are already on the treadmill. Effects of Spending on Financial Independenceįinancial literacy can pay great dividends in this respect. To make matters worse, the increasingly progressive tax burden on that additional income can further destabilize your finances. Thus, you work harder and harder, spending more and more, and then find you are no happier making and spending $500,000 a year than you were making and spending $100,000 a year. To make matters worse, many of us find ourselves on the “hedonic treadmill,” also known as “hedonic adaptation.” As you make more money, your expectations and desires rise in tandem, resulting in no permanent gain in happiness. It is also a truism of personal finance that decreasing spending is far more psychologically painful than increasing spending is pleasurable.

For most people, it requires a conscious and sometimes difficult effort to avoid this process. What should we do? The Hedonic TreadmillĪ. Just as the time required to perform a chore seems to expand into the time available, so does our spending naturally expand until it consumes our entire income. I am a bit embarrassed to say this, but I don’t see how we could spend much less than we currently do without a dramatic change in our lifestyle. My spouse and I have found this to be very difficult, both early on and now that we’re in our mid-careers.

Q. I know you have recommended that attending physicians should be putting about 20 percent of their gross income toward retirement.

Physician Wellness and Financial Literacy Conference – Park City.

Continuing Financial Education – Las Vegas.

Financial Wellness and Burnout Prevention for Medical Professionals.

Hedonic treadmill