The Treadmill that Does Not Get You Fit (financially)

by Adam on March 3, 2010

When most people think about the subject of personal finance they think about cutting back; that a budget is all about not spending any money; that saving for the future stops them from truly living in the present. I’ve certainly heard this recently when some of my friends began hearing about what I’m doing here at Magical Penny:

“Oh Adam, you won’t like this but I’ve just bought a new laptop”

“Why are you saving so much when you could save a little less to allow yourself to live more in the present”

For many, saving money is perceived as something that deprives them of every day pleasures and happiness. They think that those who do save their pennies must be living boring lives, depriving themselves by avoiding spending money on fun things. Of course this isn’t true.

Avoid the Treadmill

One useful theory in psychology that I’d like to share is called the ‘’. It’s used to describe how no matter how much we progress in our lives, be it in a career, or in the size of our bank account, we remain largely at the same stable level of happiness. For almost all of us, even if we are always increasing our standard of living, our happiness will not increase with it. We get used to it, in the same way that lifestyle inflation makes what we have seem ‘normal’. Rather, our happiness is more influenced by relative measures: are we doing better than the people around us or better now compared with how we were doing recently?

Does Spending Money Make You Happy?

I’d like to take this idea and apply it to spending. It’s common knowledge that money doesn’t bring happiness so why do so many people think spending brings meaningful happiness? Of course most of us get a buzz out of something new: for me I think of things like a new camera or a computer. Perhaps for you it’s clothes or shoes, or something bigger like a car or a new house. It’s only human to enjoy getting something new, something better than what we had before or better than what our friends have!

However, soon after the purchase, perhaps over the course of the following few weeks and months you’re not likely to be more happy in your everyday life. A newer car or a faster computer may make our lives a bit easier, or more comfortable, but does it really increase our happiness over the long term? Not so much.

So if you are not going to any more happy after purchasing perhaps you may as well begin saving more! And when you being appreciating the true price that we pay for just being ‘comfortable’ or for the ‘convenience’ it becomes even easier to get excited by the idea of saving and investing in your 20s and 30s, due to the power of compounding.

The Search for Real Happiness

Although the hedonic treadmill theory tells us that our basic level of happiness stays the same  it is still important to seek out happiness every day. We already know this and a lot of people look to make themselves happier through their spending habits.

However, I encourage you today to have a think about what makes you memorably happier.

Think specifically.

What were you doing in your favourite memories? Who were you with?  If for example your best memories are from holidays with friends, then make it a priority and recognise that in order to afford to do it again perhaps you should cut back on things that don’t matter so much to you.

To give my own example, I’ve not found a car to be a priority to me (yet) but when I do, I recognise that over the long term my level of happiness is going to be relatively stable whether I have a new or an older carI’ll take the second hand car and make a commitment to save more both for my future self and for an adventure holiday to Rio De Janero for Carnival. Going on this holiday won’t affect my base level of happiness over the long term either, just as a new car wouldn’t, but I’m sure it will create happy memories that I’ll be able to call upon in years to come. For me that’s a better trade than being ‘comfortable’ in a new car. It’s just not my passion. How about you?

If Money Doesn’t Bring Happiness Why the Focus on Growing Pennies?

Saving and investing for the future is not about a quest for happiness. And I’m certainly not the first to write about money not bringing happiness! As I wrote above, we have to seek out happiness every day in our own way, but when we do, I suggest you make sure to avoid the hedonic treadmill and focus on authentic experiences.

So what is Magical Penny ultimately about? It’s about growing your pennies to give you options. Options like the choice to retire early to allow you to more control over your schedual, or being financially secure enough if you decide to change careers or take a break to start a family. Or for any other reason you may have.

I hope you’ll join me in making a commitment to disconnect happiness from spending, to avoid the hedonic treadmill and get financially fit at the same time!

This article was partly inspired by:

In other news, Magical Penny was featured in 2 blog carnivals this week and I’m understandly excited and honoured to have been selected. Reading the articles featured in both carnivals is a great way to learn about the many different facets of personal finance.

Carnival of Personal Finance @PTMoney

“Over at the Magical Penny, Adam presents something to look forward to: a really spiffy car for your midlife crisis. Plan for the crisis now, he says, and you’ll be able to afford it.”

The First International Personal Finance Carnival Personal Finance Bloggers Map

Magical Penny‘s first guest post article 5 Tactics to Avoid Overspending When Traveling was featured in the carnival that features “top contributions from around the world…from bloggers who are included in the Personal Finance Bloggers Map.”

{ 8 comments… read them below or add one }


Money does not buy you happiness, but if you have your personal finances in good order it is a lot easier to be happy and feel good about your life. Similarly, bad personal finances causes you a lot of stress which is not part of a happy and content life. Money is just that important in our lives, isn’t it?


Adam, surely you’re being a bit disingenuous in the latter part of this article? After all, one of your own articles earlier this month was about putting off spending today to afford a Ferrari when you reach mid-life-crisis stage.

Lets not mince words. Since the industrial revolution Western civilization has been a capitalist and materialistic society based around the exchange of goods and services in exchange for currency (and such models have existed for much of humankind’s time on the planet). Money is, by definition, for spending, whether that be now or in the future. You can’t take it with you when you die, and you’ll lose most of it in inheritance tax if you try (I’m personally in favour of the concept of a 100% inheritance tax, but that’s another debate). Honestly, saying that the entire concept of saving is about generating ‘authentic experiences’ and ‘future options’ doesn’t particularly wash with me personally. Much better to have a (materialistic) goal in mind and save for that.

The problem with the ‘future choice’ argument is that you’re meddling in hypotheticals and what-if scenarios. Whilst I’d agree that having money aside for the unexpected (a ‘rainy day’ fund perhaps) is prudent, you could easily be losing out on ‘authentic experiences’ by putting off until tomorrow what you could be spending today (as well as missing out on hard cash – ref. the car article). You could also be changing the person – you – who ends up making these ‘future choices’, getting into an interesting paradoxical debate. Do spending habits now dictate your attitude to life later on? Does the stereotype of the rich old miser sat miserably counting his pennies not sometimes ring true?

Turning to the ‘Hedonic treadmill’ (I’d like a membership to a gym with some of these, please :-D) there is a fairly valid counter argument. Living almost up to your means can actually be worthwhile and useful. Not only do you know where your limits are and what you can reasonably spend (and save), but it can also act as an aspiration raiser – you know that if you want to raise your standard of living then you’ve got to earn more money month-to-month, either by getting a better education, a better job or by having a great business idea. Is it a coincidence that many entrepreneurs start off in relative poverty?

Do I think society is too materialistic? Yes. Is it a crying shame that people these days judge you first by your possesions rather than by your attributes as a person? Of course. But until the Revolution comes, I’m thinking that these things aren’t going to change, and happiness will remain reassuringly expensive.

Rightly Knight

For perhaps the first time in my adult life I am in agreement with Sean about various bits of his comment.

As ever your article is well worded, but what you miss out, and what I worry for you is the ‘endgame’. When it comes to spend those pennies will you be able to or will you be, as Sean states, the old man continuing to count his pennies?

Also, the only reason I am in a well paid job is because I lived to my means and entered a part of my life where I needed more money. The kick up the backside from my partner becoming pregnant meant I found a job which increased my salary by 96%.

Essentially, not always being comfortable can be a good thing.


I’m afraid I’m broadly in agreement with Sean and Mr. Knight on this, Adam, largely leading on from comments from a few days ago.

As has been mentioned above, the Hedonic Treadmill is a nice idea, but does not (from Wikipedia’s limited references) seem to have a comprehensive academic history as yet, and is somewhat open to mis-interpretation. Granted, you may not be any happier on a day-to-day scale after some achievement or spending, but this could equally be as you have raised the bar to the next level of a desired attainment. This is likely to be a step forward in the grander scheme, and providing it hasn’t left your finances completely shot (where obviously, I agree with large amounts of your day-to-day advice i.e. credit) constitutes progress.

I would hate to think that by saving more now through being comfortable [I don’t feel it is just me thinking this can imply [rut] in certain circumstances] I have prevented the immediate achievement of a goal necessary for me personal longer term progress. Obviously, saving can be another means to the same end, but not for everyone, and providing your finances are generally controlled the power to act works both ways. I’m happy to agree that both can be successful, but it is equally understandable why people want to make the most of their talents, qualifications and dreams when they are young, and why in our society (as I have said before and Sean mentions above) this is not always conducive to saving.

But obviously, none of the above excuses half-assed day-to-day financial managment, where I think we can all improve.

The other Adam

While I think Jon, Mr Knight, and Sean are all making very good points, it yet again falls back on what has been mentioned time and time again. Personal finance is personal. I personally would much rather live below my means, to some extent. This is mainly because my goals are different, and all the things that make me truly happy in life are potentially free. Yes I enjoyed buying my new computer, but after the excitement wore off it was just another purchase. Whereas an afternoon in with my fiancee doing a jigsaw and watching TV (yes, we’re jigsawers) is much more valuable to me in the long run. One cost me £600, the other cost my £5. I’ll let you decide which!

I gave up a job that was high pressure, but with great job advancement potential as I was not enjoying it, and it was starting to affect me in my personal life. I am now at a much more relaxed job. Ok, the promotion opportunities are far more limited, but I am happier in general. I have been able to enjoy my weekends with my family and friends because I’m not spending all the time thinking “God, I have to go to work on Monday…”

A bizarre consquence of that is that I have actually saved almost double in the 6 months here than I did in my old job. I am enjoying the more important (to me) social side of my life again, so I don’t need to try and fill it with nice new expensive things to “make me feel better”, which they never did.

Now, I am not against spending all together. I personally go on a lot of meals and night out, with family and friends. But that is because I find this makes me much happier than spending money on nice new flashy things. It creates memories that will last much longer (is there any way to talk about this stuff without it sounding slushy?). However, I will always try to put aside current wants for a longer term goal, which was to buy a house. The house purchase is nearly complete now, so then it will be saving for a wedding, then saving so I can help my potential children out when they leave school. Even now this is a much happier thought than all the possessions I could possibly own with that money.

I think it all comes back to the question “What do you really want?”. Ok Sean, saving for potential future options doesn’t really work for you. If you have no big future goal in terms of improving your happiness then of course it is better for you to spend your money on things that make you truly happy now, or to save for that big materialistic goal. And Mr Knight, I totally agree that if you end up and old miser counting your pennies then this is no way to live your life either. My grandad was much like that, and the sight of a small man wrapped up in his blanket next to his cheap little electric fire is not one I would wish on anybody. However, I think the main point that Adam is making is that it would be silly to live to my means buy buying nice new things, if I then can’t afford a trip to the lakes with my friends, for example.

I enjoy my job right now, but if it comes to it and I need more money I will move on or push for a promotion. But wouldn’t it be nice to think that I have saved up enough money so that I can do it when I want to, rather than when I have to?


Great post the ‘other’ Adam, I have to say. You’ve added a more ‘human’ and personal touch that I think the post itself needed to support it. As I said in my comment, there are plenty of circumstances where immediate saving is the correct path, but I feel it can’t be a choice that in any way feels restrictive for the individual.


Great point @ctreit. Hopefully Magical Penny can play a small part in helping people get their finances in order. Thanks.

@Sean, I love your comments because they force everyone to really think about the issues at hand. And that’s exactly why I write this stuff.

Money is a form of value that people can use to get others to provide value to them. One of my points is that as a young adult I’m in a great position to provide value to other people’s lives, and saving for a time when I’m not in such a great position to create value.

Also I disagree with your clear differentiation between ‘materialistic goals and my ‘authentic experiences’ and ‘future options’ – ‘future options’ can be materialistic ones too; saving now will give me the ‘option’ to buy a sports car in cash (although to be fair it was more of headline to grab attention than a real material goal for me.)

You make a great point about how saving can change someone’s intentions and attitudes. I would respond that at least the ‘rich old miser’ has the option to stop counting his pennies and do something new (however unlikely that is). A poor old miser does not have that option.

I love your argument on how living to your means or perhaps a bit over can be an aspiration raiser -I’ve seen this in a number of my friends and as we’re all generally a bright bunch, it’s worked out well for them. Perhaps because it’s because I’ve also heard so many horror stories (admittedly 2nd and 3rd hand), that I’ve adopted a more prudent approach.

However to counter your counter argument (because it’s fun!), I would say that truly appreciating the power of compound interest actually makes you want to not only save but earn as much ‘extra’ money as you can because you know the effect it could have in the future. That said, there’s a whole other debate as to if you perform better at increasing your income if you are in a position of privilege or need -From a position of privilege you are not desperate and less likely to make risky or silly mistakes, but likewise there’s nothing like the drive to put food on your table to make you spend countless hours in the pursuit of money making opportunities.

@Andy. I feel I’ve got plenty of time to consider an endgame: what I’m wanting people to do now is simply to ‘start’ something; saving; thinking about their money etc. You did a great job at increasing your income though -that’s often the less popular side to personal finance but it’s what can make the biggest difference. Great work.

@Jon: I love that you were able to pick up on the conflict I felt personally as I was writing the article -the conflict between the Hedonic treadmill theory saying people’s happiness is generally a constant and my own belief that happiness is something like personal hygiene -something to be worked on every day.

The rest of your comment was spot on too, thanks for contributing to the discussion. I love how this blog is providing us with a forum to talk about stuff we never really would get to talk about otherwise.

@The other Adam -Wow, Adam, thanks for being so open on Magical Penny and well done on the saving. This is exactly the kind of comment that could prompt another reader to look into their own life and decide what’s important to them. And that’s exactly what this site is all about.
Thank you
…even if you are a…. jigsawer!

Kate Newby

I agree with ctreit – I don’t make the most money and for years I was in a horrible financial situation. Luckily I have pulled myself up and now I am still living paycheck to paycheck, but I have a great emergency fund and so much of the stress I had is gone.

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