Why you won’t regret cutting back on your spending

We read a lot of stories about how ‘less is more’ and how a minimalist lifestyle can be just as rewarding as (or more rewarding) than owning a big house, nice car and buying luxury products regularly. It seems too good to be true, a little too new-agey and easy to reject outright, but is there any truth to these claims? Can we really enjoy a life where we buy fewer things, consume fewer things and spend less money? And, if yes, why are so few of us doing it?

Is all growth good?

When discussing minimalism with friends, I get mixed responses. Some instantly ask, “Why would you want to own just 100 things? What’s the point?” and others ask, “What does that mean? Should I just not own this couch and instead watch TV on the floor?” (the necessity of television is arguable, but I'll leave that debate for a future post). Why do many of us struggle to perceive cutting back and consuming less as a positive action? Vicki Robin and Joe Dominguez, authors of bestselling personal finance book, Your Money or Your Life, describe how many of us have bought into the myth that “more is better” and “growth is good”.

We apply the idea that "more is better" to our consumption and can find ourselves wanting to (or feeling a need to) purchase a bigger house, to purchase a bigger, fancier car or to purchase gadgets that help us to ‘do more’ (when in fact they leave us with an inability to focus on one thing for more than a few minutes). Why do we express the idea that ‘growth is good’ through our spending? Because it’s a tangible way of showing others how we’re moving up in the world. To do the opposite, e.g. moving to a smaller house, getting rid of the car and using public transport instead, living with just the bare essentials, would communicate that we have had to give up those things because we can no longer afford them. Whether this is true or not, it’s an easy conclusion to jump to. After all, why would you choose to live with less?

Why do we express the idea that 'growth is good' through our spending?

Why do those who quit their jobs for less money or sell all their possessions and travel the world claim to be happier? It comes down to the hedonic treadmill. The hedonic treadmill, also known as hedonic adaptation, is the observed tendency of humans to quickly return to a relatively stable level of happiness despite major positive or negative events or life changes. Put more simply, whatever happens to you, good or bad, you’ll quickly get used to the change in your lifestyle.

Why hedonic adaptation is good news

Hedonic adaptation, or the ability to get used to anything that life throws at us, is helpful. We developed it to survive any situation which means we're a lot more adaptable to change than we give ourselves credit for. It’s a shame that so few of us are aware of it. How differently would the world be, if we realized as children that it makes no difference whether we have 20 toys taken away from us or we receive 20 more toys, in the long run, we’ll return to the same level of happiness as before.

Whatever happens to you, good or bad, you'll quickly get used to the change in your lifestyle.

It would certainly benefit us if we more readily recognized that, as adults buying luxurious goods will create a temporary spike in your contentment, but in the long-term you’ll feel no different because you’ll soon get used to the new standard of living. Understanding and acknowledging hedonic adaptation can help you look more critically at how you choose to spend your money.

Ok, so you don’t think that buying one less coffee will have a huge shift on your happiness, but that’s the point: small shifts can be painless, but the small cut in expenditure will add up over time. Once built up into savings, you can use the money on something that will bring you more value than the mindless things you bought before.

Understanding and acknowledging hedonic adaptation can help you look more critically at how you choose to spend your money.

Are you ready for the challenge?

Here are some simple challenges that you can try out for a month to see how quickly you adapt to changes in your spending.

  • If you eat out lunch every day at work, try taking just one packed lunch to work every week for a month.
  • If you buy three magazines a week, try buying just one magazine every week for a month.
  • If you drive everywhere, try not using your car one day every week for a month. Use public transport, walk or cycle instead.

These challenges are here to help you recognize that cutting back isn't about deprivation. You may feel the pain of change immediately but, over time, that pain will disappear. Then, you will have witnessed the power of hedonic adaptation. As always, tailor the suggestions to your circumstances.

What can you cut back on once a week for a month?

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