Many of us have set goals for the new year in the form of New Year’s resolutions. On the whole, the intent of these resolutions is personal betterment in some part of our life. Many people share their goals that generally resolve to change a behavior or habit or accomplish a personal goal. This year the goals I’ve heard include “dry January,” “stop snacking,” “improve waterskiing skills,” “renovate a lake house,” “sell my business and transition to retirement,” “start a family,” and “improve financial well-being.” These goals span a wide spectrum of interests, plans for our lives, and echo our values.

I get a mixed response when I tell people I’m working hard to get off the treadmill, but not the treadmill we’re running on at the gym. One of the hardest resolutions I’ve been wrestling with is getting off the hedonic treadmill.

The term hedonic treadmill, also known as hedonic adaptation, was created in the early 1970’s when behavioral economics came onto the scene combining psychology and economic behavior. In 1971 two psychologists, Philip Brickman and Donald Campbell, coined the phrase hedonic treadmill in an essay they titled “Hedonic Relativism and Planning the Good Society.” The basic theory described by Brickman and Campbell is that we return to a baseline of happiness no matter what the positive or negative events we experience in life. When applied, this theory would posit that as a person gets a promotion, wins the lottery, sells a business, thereby making more money or creating more wealth, their desires and expectations also increase, thereby leading to no real gain in happiness—hence the phrase hedonic treadmill.

So, how do I get off this hedonic treadmill? What if I told you that I’ve found it is as simple as creating a budget? The exercise of creating a budget helps me answer the question: Am I living my values and goals through my spending and saving habits? In our fast-paced digital economy where e-commerce and electronic payments happen on our phone, it’s been all too easy to quickly lose sight of living out our intentions and values through our spending. On the flip side of the coin, it’s also never been so easy to access bank account and credit card information and track spending in apps to inform decision-making. At the outset, it is a process that needs to be customized to fit. I’m old school and created my budget process before joining Greenleaf Trust by building spreadsheets and tracking my budget manually, but free budgeting apps exist like Mint, Goodbudget, and Honeydue. is a great place to start and look for reviews on budgeting apps that are designed to make the personal budgeting process easier. Our client centric teams are also armed with tools in MyWealth by Greenleaf Trust. MyWealth helps clients with goals-based financial decision-making by bringing together financial data that informs budgeting, creates net worth statements, and models the impact of spending and investment decisions.

Going back to my boring spreadsheet method, I start by recording any income after tax, then download three months of bank statements and can quickly paste my spending and sort by type of spending. I start with those expenses that are required spending that I term “lifestyle spending,” which includes the necessities—payments for groceries, housing expenses (mortgage, property taxes, insurance), utilities, some clothing expense, and any car payments (including gas, regular maintenance, and insurance). The next category of expenses includes discretionary spending, like entertainment, dining out, travel, buying kids’ toys, and purchases of household items. Discretionary expenses are wanted, not needed. Everything else that is left over, is either assigned to a goal of mine, which includes saving for my children’s education, saving for retirement, and saving for some planned large budget event in the future. One could certainly get more granular by receipt, but I consider every Meijer purchase grocery and every Amazon purchase discretionary.

This is the point where I ask myself: “What does my spending show I value? Does that align with my values? Are there places for realigning my spending and values?” In all honesty, I almost always notice a few places for improvement and also notice moments, like subscription services, where I can cut spending completely that crept into my household budget..

There are other ways to gamify the way I spend to cut back on any frivolous spending, which include the 48-hour rule, the envelope game, and no-spend days. Here’s a quick explanation of each. The 48-hour rule has saved me numerous times from making purchases through Amazon, or Dick’s Sporting Goods. The idea behind the 48-hour rule is to place items that I find myself interested in purchasing in the cart, but waiting 48-hours and returning to the cart and asking myself: “Is this really something I need/want?” The envelope game is another way to curb spending. When I’ve used it, I’ve generally used it a month at a time for discretionary expenses, like dining out, entertainment, and goods purchases. The idea behind the envelope game, is to introduce resource scarcity and the pain of paying. Budgeted cash is placed in an envelope marked for by purpose/category, which sets a limit for what can be spent. Cash is then pulled in the envelope for its intended purpose. Just the process of introducing paying for things with cash adds an extra layer of pain to the spending process that slows decision-making and spending. The final game we play in my house is to see how many consecutive days we can go without spending. It’s not always easy, but with gas tanks full and a fridge stocked full of groceries, you might be surprised how many days you can stretch.

A generally accepted budget principal is that 50% of income should fall into the needs bucket of lifestyle spending, 30% should fall into the wants category of discretionary spending, and the remaining 20% should be committed to saving or debt retirement. Budgeting is a zero-sum event; every dollar is assigned to some purpose.

The exercise of budgeting in 2023 has shed light on whether my spending is achieving the goals I’ve set and whether or not what I value clearly matches my spending behavior. For me, it’s important to remember that the expenses I’m covering in my family’s budget has come from the time I’ve traded to build a career. For your family it might be time you spent building a business, or time your parents or grandparents have traded to create wealth, which carries with it a responsibility for spending behaviors to align with family values.

So far this year, I’ve stuck to my New Year’s resolution, and I hope you are sticking to yours, too!