Circumstances do not account for most of our happiness. In fact, they barely affect it at all. Studies show that 50% of our happiness is genetic, 40% is our own thoughts and choices, and only 10% comes from outside circumstances.*
But somehow, we always seem to think that happiness is just right around the corner, waiting to greet us when we accomplish the next big thing. Perhaps this is why very few Americans actually consider themselves “rich” — they refuse to believe they have truly arrived because they don’t feel any happier. Additionally, as income increases, spending does too, so they never actually feel any richer, either.
But what about the people who do feel “rich?” What is their secret? Let’s dig a little deeper into our spending habits and see where happiness actually comes from.
The Hedonic Treadmill
The Hedonic Treadmill theory states that humans will always return back to a baseline level of happiness, regardless of their circumstances. This means that, yes, certain things can boost your happiness for a little while. But, after the initial happiness burst fades, you will be just as happy as you were before.
We have all experienced this phenomenon before, right? We think our lives will be better once we graduate from school, get that job, own that new car, buy that house… and for a while, those things do make us feel good. However, it doesn’t take very long to feel just as we did before.
What does this have to do with finances?
When it comes to spending money, this theory implies that as we make more money, our expectations also increase, and there is no lasting increase in happiness.
One more time- the more money we make, the more we desire. When expectations and income rise in tandem, no one gets any more “rich,” and no one gets any happier.
The image of a treadmill makes perfect sense; you have to keep running and working to maintain what you think is a “necessary” level of happiness. The more you get, the more you want, and the faster you will be running. Many, many Americans are stuck on this “treadmill,” and getting off seems more like a fantasy than an actual reality.
How to get off the treadmill and have a “rich” life
The good news is that there are ways to increase your baseline level of happiness that actually work (unlike just getting more stuff). This is the secret that truly “rich” people understand: being rich isn’t about money. It is about getting off the treadmill and creating a life of purpose and freedom.
So, yes, you can lead a “rich” life earning 50k a year or 500k a year. It is all about designing a life where you can do the things you love and have confidence in your financial future.
1 — Prioritize the People and Things That You Actually Enjoy
People who live a “rich” life spend their time and money on the most important things, like relationships and activities that give them purpose. What can you cut out of your life to make room for these things?
2 — Get Rid of the “More” Mentality
The mentality of “more” or “keeping up with the Jones’” is so ingrained into our culture that it can be hard to shake. Next time you get a raise, try increasing your monthly savings rather than buying that new car. You will find that if you never put new things on your treadmill, you won’t miss them.
3 — Make Sure Your Money is Working for You
People who feel truly “rich” are the ones that let their money work for them and not the other way around. Work with a top financial advisor in Salt Lake City to create an investment plan that aligns with your risk tolerance, personal goals, and financial situation. Having your money work for you is an essential step in achieving a life of financial freedom.
4 — Create a Financial Plan You Can Have Confidence In
Financial freedom starts with having a plan for your money. Sit down with a trusted financial planner and create a comprehensive wealth management plan that includes retirement, estate, insurance, and investment planning. When you are confident that you have a stable financial future, you will be confident in the way you are spending your money now.
So, instead of chasing more and more and more, start focusing on building a life of purpose. Meet with a financial planner and create a wealth management plan that will enable you to achieve financial freedom regardless of your financial state or stage in life. TrueNorth Wealth is one of the best wealth management firms in Salt Lake City and the surrounding areas because we are with you every step of the way as you create your own “rich” life.
Written By: Joseph Griffin