Money and Hedonic Adaptation
INVESTING ON THE GO - Vernon Joseph Go (The Freeman) - June 12, 2017 - 4:00pm

In this column last year (December 16th entitled “Spend more now and less later”), I wrote a few references on Hedonic Motivation, Hedonic Adaptation, and Hedonic Tilt; today I will solely focus on Hedonic Adaptation which is also related to last week’s Lifestyle Inflation.

Like lifestyle Inflation, Hedonic Adaptation can easily be misinterpreted and also become demonized by the financial industry. Hedonic Adaptation is when people can easily adapt to living with less, without suffering many negative consequences, but when we are constantly pursuing more, we have to get even more to stay happy.

It is both positive and negative. If one is trying to maintain a budget or savings to pursue a financial goal, we can most definitely succeed because we can adapt to living with less without depriving ourselves.

On the other hand, however, if we strive more (whether consciously or subconsciously), and get something new or cool that is introduced to our lives, suddenly that new or cool thing can become the new normal and now it takes something newer or cooler to satisfy you! This can easily lead to lifestyle inflation as we try to upgrade everything in our life once we get an increase in cash-inflow or income.

You could even say it is similar to what we millennials say or classify as “WALANG FOREVER” – No matter what it is that makes you happy, you can get bored of it after a while. But at the same time, YOU can move on and also get over it!

Hedonic Adaptation is a feature built right into your Human DNA that allows you to function efficiently in a wide variety of stimulus, environments,even very harsh ones (This includes the ‘matters of the heart’).

“No matter what happens to you in your life, you’ll very quickly get used to it.” – Hedonic Adaptation

How to use hedonic

Adaptation to your advantage

The Power of ‘the Pause’ – pausing is a simple way of stopping you from spending immediately based on an impulse or save money. Pausing allows you to question, and ask yourself “Do I really need this?” A pause can also help you become more self-aware and be in the moment to appreciate things and be grateful for what we already have. Sometimes we often focus on what we want or what we can potentially lose that we fail to see our already abundant life.

The Power of Perspective – Your viewpoint shapes your thoughts, decision and actions – ultimately your view of yourself (Failure or Success). If you lost a job, maybe it’s time to invest in yourself and learn new things. If you must reduce your spending, maybe it is time to remove the excesses of your life and perhaps spend more meaningful time with your family.

This is also connected to our habits and the type of stimulus we willfully expose ourselves to. We can get addicted to a book, series (Kinainna ng KDrama) or the like. But at the same time, we can also by our own force of will and creating routines, can establish good (or even great) habits for a better life.

“There’s nothing wrong with the world. You can make it heaven or hell according to your approach.” – Swami Satchidananda

* * *

The writeris an RFP® - registered financial planner and helps people through CERTA, Inc.’s financial education programs (www.certa.ph).He is also a Real Estate Broker, author of the award-winning personal blog – www.vernongo.com and an Instagram travel-micro-blogger (@PhantomNomad).

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