New Car vs. the Annual Vacation

What do you think would make you happier, a new car or annual vacation? Which one should you prioritize? In today’s “Financial Friday” post, I want to get you thinking about hedonic adaptation.

In layman’s terms, hedonic adaptation means that no matter what happens to you in your life, you’ll very quickly get used to it. For example, while you are shopping, you see something really attractive and think, “That will make me happy!” So, you buy it, and it does make you happy—for a little while, usually a very little while. Yes, the rush wears off quickly. You see, behavioral finance teaches us how emotion and other irrational forces play a huge and mostly unconscious role in our financial decision-making. What we don’t realize is that we have a tendency to return to our baseline level of happiness. I read that even lottery winners typically revert to their regular level of happiness after two months.

Biblical Wisdom

That’s why there is such great wisdom in the Apostle Paul’s words in Philippians 4:12, “I know what it is to be in need, and I know what it is to have plenty. I have learned the secret of being content in any and every situation, whether well fed or hungry, whether living in plenty or in want.” For Paul, circumstances did not dictate his happiness. His contentment wasn’t based on consumption or comfort. His inner joy was maintained by his relationship with Jesus.

So, let’s get back to the original question, new car or annual vacation? First, realize your long-term happiness shouldn’t depend on either one. With that having been said, hedonic adaption means that your new car will become just your normal car (and it won’t stay new) to you. Your vacation, however, probably won’t be long enough to become your new normal. Plus, the memories you make on your vacation will be unique to you and will give you pleasure long after your vacation is over. The verdict is this: drive the jalopy for as long as you can and instead go hold hands on a deserted beach. Or walk the streets of Venice. Or take that mission trip to Columbia. And thank God for all His good gifts.