Thanksgiving isn’t just for the 4th Thursday of November. Regularly giving thanks or writing the things you are grateful can create massive increases in both your finances and your happiness.
Thanksgiving and Finances
How does giving thanks impact your finances? Gratitude is one of the best ways to increase happiness. It teaches you to enjoy the things that you already have which in turn reduces the need to purchase new things. Have you ever bought something new and been really happy about it—a new phone or car or article of clothing? Chances are that item no longer brings you anywhere near the sense of joy or excitement you had when you initially purchased it. You may even resent this item if it requires maintenance or doesn’t function properly anymore. This is called the hedonic adaption where we tend to return to our baseline happiness after positive or negative changes to our happiness. We believe that new items will give us a permanent boost to our happiness but in reality that happiness fades quickly and we end up looking for a new item to buy to give us that boost to our happiness.
Hacking Hedonic Adaptation
Hedonic adaption means that positive events won’t make you as happy as you predict and negative events won’t make unhappy as you predict. After positive events, your happiness reverts back to baseline and after negative events, your happiness reverts back to baseline. The trick is to drag positive events out and savor them and to take negative events all at once—like ripping off a band-aid. This extends how long it takes to revert to baseline for positive events and quickens how quick you get back to baseline for negative events.
For example, if you are remodeling your house, slowly add one upgrade at a time. Buy one piece of furniture at a time. This allows you to appreciate that item as it is new and as your happiness with that item fades, you can do the next item. This is better than doing everything all at once because you have more time to savor the happiness.
In contrast, if you plan on cutting your lifestyle, you will want to do it all at once. Instead of getting rid of one luxury at a time and easing into it, get rid of everything all at once. This way will prevent you from resetting your clock back baseline each time you take a new luxury away. So if you plan on cutting your spending, move to a cheaper house, sell your expensive luxury items, stop going out to eat, etc… all at once. Then in a few weeks, you will be back to your original happiness level and not know why you thought you needed these things to survive. Another benefit of doing it this way is that if there are some things that you really feel you want, adding those things back into your life will make you much happier than if you had never taken them away.
Lottery winners generally revert back to their original happiness levels or actually lower due to the added stress the money brings where survivors of disasters often end up appreciating the small things in life and as a result are happier than before the disaster. Luckily, as humans, we have the ability to use our imaginations to create the same effect of a disaster without actually experiencing a disaster. You just need to imagine what it would be like if you had a disaster where you lost the things you no longer appreciate. This process is called negative visualization.
Negative visualization creates an appreciation for the things that you already have. When you appreciate the things you have, it resets you back to the feeling when you first bought the item. You will savor the experience of having that item more. Think of how you felt before you purchased that item. Think of what it would be like if you didn’t have that item.
For example, let’s say you usually buy a car every 4 years. After 4 years, you are tired of your car and don’t appreciate it and can’t wait to get a new car. Think of what your life would be like if you didn’t own any car and how you would manage your daily tasks. Think of what life would’ve been like 50 years ago when your car is superior to anything even the richest person on the planet could’ve driven. What features impressed you most about your current car when you bought it? What would your life be like without those features? These thoughts create an appreciation for what you already have.
Applications For Finances
These strategies allow you to drastically cut your expenses and then slowly add back expenses that you really miss. Reducing expenses has the biggest effect on your finances because it allows you to increase your savings while at the same time reduce the amount you need to save to reach financial independence. Understanding hedonic adaptation also allows you to slow down or prevent lifestyle inflation because you no longer need to keep buying newer and more expensive things to keep bumping up your happiness. The best part of all is that you get the benefit of these reduced expenses while at the same time maintaining and more likely increasing overall happiness! So give thanks for the things in your life you already have. Chances are that many of the things you already have are things you once would trade anything for.
Bonus: these strategies apply to non-materialistic areas of your life also!
What are some things that you may have started to take for granted that you could apply these strategies to again feel thankful for?