Extreme Savings, Money Mentality

Will It Make Life Better? How to Know Before You Buy

Sometimes spending money results in a direct increase of happiness. They are the purchases we dream about yet rarely achieve: the reliable car that cuts your bus commute in half or a blanket that lasts for years and never loses its softness. Whether big or small, purchases that increase happiness are awesome.

Money = Happiness (Until It Doesn’t)

I distinctly remember the day I signed a lease with my partner. It was my first time living without random roommates, and it was a pivotal moment because I had secured myself a safe, clean and private place to live for the first time in my adult life. Spending an extra $150 month provided me a direct and substantial happiness boost. I no longer had to deal with strangers entering my room at 3AM, gross bathrooms or stolen food.

There were so many small moments where I noticed a drastic increase in my quality of life. Some were absurd, like the time I realized I could sit on my own toilet without fearing germs or vomit. Some of the moments were big, like when I had a final to study for and had a quiet place to study without distraction. Overall, my quality of life drastically increased for the relatively small price of $1,800 per year, and there was a direct relationship between money spent and happiness acquired.

However, that isn’t always the case. I went through a period when I was 18 where I was obsessed with designer sunglasses. In less than two months, I spent upwards of $700 on Ray Bans, Marc Jacobs and Gucci frames. At the time, I truly believed the glasses would make me happy. Instead, I hardly wore them because I was worried they would scratch or break. 9 times out of 10 I opted for my $15 sunglasses from Target instead. Instead of bringing me happiness, my designer shades brought stress and guilt into my life. Two months later, I sold the 3 pairs for a 50% loss and felt instant relief.  It was clear that the sunglasses pushed me over the peak of my happiness curve.

What’s the Happiness Curve?

The happiness curve (or “fulfillment curve” as it is called in Your Money or Your Life by Vicki Robin and Joe Dominquez) is a graph that charts your happiness levels in relation to the things you buy. Dominquez and Robin explain that in the beginning, spending money resulted in increased happiness—food, shelter, clothing.

As children, our parents or caregivers provided most of the necessary items like food, shelter and clothes. Although we didn’t deal with the exchange of money for goods, we still understood that items like pacifiers, blankets, and bottles came from outside sources and brought pleasure and comfort.

When basic needs are met, we have reached the level of “Survival.” (Pictured below) Surprisingly, the “survival” level is only one level away from maximum happiness. In other words, we need less stuff than we think we do. For most adults, survival includes housing, food, clothes and transportation.

 

FullGraph.Survival

Graphs are courtesy of www.investmentmoats.com

 

After “survival” comes the “amenities” level (pictured below). For children, this level includes things like toys or special fieldtrips. For adults, it will typically manifest itself in extra soft bedding, coffeemakers or sporting equipment. Amenities are small comforts that make life more enjoyable.

 

FullGraph.Amenities

 

The next level is “luxury” or enough. As you can see, it is the peak of happiness because luxuries are still considered luxurious. It is the point of happiness in which a new Honda or Toyota is celebrated and living without roommates in a one bedroom apartment is considered a blessing. All of your basic needs are met, amenities are plentiful and luxury items are carefully considered before being purchased.

 

FullGraph.Luxuries

 

The jump from “amenities” to “luxuries” happens rapidly and typically occurs around 18-23 years old:

 

“Eventually we [all] slipped beyond amenities to outright luxuries—and hardly registered the change. A car, for example is a luxury that the vast majority of the world’s population never enjoys…Then there’s the luxury of our first trip away from home. For many of us, there was going to college. Our first apartment. Notice that while each one is still a thrill, it cost more per thrill and the “high” wore off more quickly.” (Your Money or Your Life)

 

Unfortunately, maintaining the peak of happiness can be difficult. Until we hit the peak, the standard formula of “more stuff = more happiness” is generally true. Your first car probably will make life easier and graduating from a tiny studio apartment to a spacious 1-bedroom will increase joy. But after reaching the peak, the formula stops working. More stuff becomes a burden and begins to increase stress instead of happiness. The fourth level is “overconsumption,” and it illustrates that happiness decreases despite increases in spending.

FullGraph.TooMuch

Still confused? Here’s an example of all four levels illustrated through housing:

1. Survival—My first apartment was a one-bedroom apartment I shared with two other girls. Although always dirty and regularly disgusting, there was a kitchen that worked, a desk at which I could study and a bed for sleep. (Strangers entering the bedroom to use the bathroom often interrupted my attempts at sleep, but the bed was present nonetheless.) Despite its problems, my survival needs were met. I had shelter, but not much more.

2. Amenities—My next apartment was a 500 square-foot studio apartment from the 1920’s. It was filthy when we moved in, but after a thorough scrubbing and the strategic placing of hand-me-down furniture, it became comfortable. My partner and I had a safe, quiet and clean place to live. Although a noticeable step up from the “survival” level, it left a lot to be desired. We had no bedroom, the kitchen retained a permanent layer of grim, we didn’t have access to laundry facilities and our balcony overlooked a somewhat questionable 7/11.

3. Luxury—My current apartment has ample “luxuries.” With over 1,000 square feet of living space, a full-sized bedroom and a delightfully large bathroom, it meets all of my needs and then some. It also boasts a clean updated kitchen, new carpet, communal laundry facilities and a private garage attached to the apartment in one of the best (and safest) neighborhoods in the city. Luxury has been achieved at all levels.

4. Overconsumption—Although I haven’t reached this level with housing, I’ll admit that I am often tempted by it. In my case, overconsumption would probably include a fully remodeled kitchen with very expensive stainless steel appliances I would worry about breaking, in-unit laundry facilities with corresponding maintenance issues and possible floods, and an extra bedroom (which requires extra cleaning and wasted space) for my occasional guest. For most people, housing overconsumption is characterized by an excessive amount of extra bedrooms and living space that is never used. The excess space causes increased consumption, stress and guilt.

Finding the Perfect Spot

Once you’ve reached the peak level of consumerism, you’ll know. Purchases will no longer bring you joy or increase your quality of life. Instead, they’ll steal your time and create stress with increased maintenance expenses or additional responsibility.

Recognizing where you are on the Happiness Curve is the best way to start. Think back to recent purchases and evaluate what level they fall under: survival, amenities, luxury or overconsumption. Once you’ve evaluated your current position on the chart and reviewed your purchases, embrace the idea of conscious spending.

In the same way it’s important to eat consciously in order to know when you’re full, it’s also important to spend consciously in order to know if it’s bringing you joy. Much like eating, you’ll know when you’re too “full” from spending by listening to your own wisdom. Once you’re “full” and decide to eat more anyways, you’ll typically end up sick. The occasional “what the hell!” extra piece of cheesecake is fun and even liberating, but if you eat that extra piece everyday on a full stomach, you’ll become unhealthy at a shockingly fast pace. Spending is the same.

The occasional luxury item or small overconsumption is fine, and even fun, but if it becomes a common occurrence, it will lose its ability to bring joy. Avoid the trap of desensitizing yourself to luxuries by keeping them rare.

What do you think of the Happiness Curve? Is overconsumption ever worth it?

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