There’s a peculiar financial experience that most people go through: they hit an income level that they once thought would feel like “making it” — and it doesn’t. The lifestyle is more comfortable, but the feeling of financial security, abundance, or freedom they imagined hasn’t arrived. More money came; the feeling didn’t. Understanding why this happens — and why it’s almost universal — is genuinely useful for making better decisions about what to actually pursue.
The Hedonic Treadmill
The hedonic treadmill is the well-documented psychological tendency for humans to return to a relatively stable level of happiness despite major positive or negative life changes. Lottery winners, research shows, return to roughly their pre-win happiness levels within a year. People who experience major income increases report the same pattern: a period of elevated satisfaction followed by a return to baseline.
The mechanism is adaptation. The new salary becomes the new normal. The upgraded apartment becomes the reference point. The nicer car is just the car. What felt like abundance at $50,000 is now the floor at $90,000 — and the psychological experience of scarcity, relative insufficiency, or “not quite enough” reasserts itself at the new level. The treadmill keeps moving; the position on it stays the same.
The Reference Group Problem
One of the most reliable drivers of the “never feel rich” experience is social comparison — and specifically, the reference group that comparison is made against. As income rises, the social reference group tends to rise with it. The person earning $60,000 compares themselves to friends and colleagues earning $60,000. When they reach $120,000, they’re now in circles where $120,000 is average — and the comparison now includes people with bigger houses, newer cars, more expensive holidays.
The comparison is always relative, which means the subjective experience of financial adequacy doesn’t improve with income if the reference group is rising at the same rate. This is why senior executives feel financial pressure at $400,000 that a teacher at $55,000 in a modest community doesn’t — the executives’ reference group contains people who spend dramatically more, making $400,000 feel insufficient despite being objectively enormous by any absolute measure.
The Difference Between Feeling Rich and Being Financially Secure
“Feeling rich” is primarily a social and psychological experience — the sense of abundance relative to reference points and expectations. “Being financially secure” is a structural condition — having sufficient assets that income disruption doesn’t create crisis, that retirement is funded, that major expenses can be absorbed without debt.
These two things are not the same, they’re often in tension, and most people optimise unconsciously for the first rather than the second. The upgraded apartment produces the feeling of abundance. The same money in an investment account produces financial security. The feeling is immediate and visible. The security is slow-building and invisible. Human psychology is not well-designed to weight invisible future security against immediate present experience — which is why the feeling consistently wins in the moment.
The Satiation Point Research
A 2010 study by Daniel Kahneman and Angus Deaton found that emotional wellbeing (day-to-day positive feelings) increases with income up to about $75,000 per year and then plateaus — additional income beyond that level doesn’t produce measurable increases in daily emotional wellbeing. A 2021 study by Matthew Killingsworth found a continued relationship between income and wellbeing at higher income levels, but the relationship flattens significantly and is mediated heavily by how the money is spent and what it buys (specifically: autonomy, time, and experiences).
The practical implication: beyond a comfortable baseline, more income produces diminishing returns in actual life satisfaction. The feeling of “not enough” that persists at $150,000 is not solved by $200,000 — it’s solved by changing the reference group, reducing the lifestyle inflation, or reorienting toward the financial security that invisible savings produce rather than the temporary feeling that visible spending delivers.
What Actually Produces the Feeling of Financial Freedom
The people who report genuinely feeling financially free — not just wealthy, but free — consistently describe a specific condition: the sense that their financial situation could absorb a significant disruption without crisis. They could lose a job and not be in immediate danger. They could handle a major unexpected expense without debt. They could afford not to take a specific job just because the money was good.
This condition is produced not by income level but by the gap between income and spending — the savings rate — accumulated over time into assets. A household earning $70,000 with a 25% savings rate and $200,000 in liquid assets feels more financially free than one earning $150,000 with a 3% savings rate and $40,000 in retirement accounts. The first household has options. The second has income.
Lifestyle upgrades
Status purchases
Keeping up with peers
More things, better things
Funded emergency fund
Growing investment accounts
Low fixed-cost obligations
Options: the ability to say no
Breaking the Pattern
The patterns that produce the “never feel rich” experience are durable — but they’re not inevitable. The specific changes that interrupt them:
- Define your own sufficiency point — decide what income level would genuinely satisfy you and what life it would enable, rather than continuously deferring satisfaction to the next income milestone. The person who decides $85,000 with a modest lifestyle is enough — and saves aggressively — is better positioned for genuine financial freedom than the one chasing $150,000 that lifestyle will immediately consume.
- Optimise the savings rate, not the income — the savings rate is the variable that produces financial freedom. A 20% savings rate at $70,000 ($14,000/year invested) outperforms a 5% savings rate at $130,000 ($6,500/year). The rate is the lever; the income is the input.
- Manage the reference group deliberately — not by avoiding successful people, but by also spending time in communities where modest living is normalised and financial independence is valued. The FIRE community, frugality communities, and similar social environments shift the reference point in a direction that makes saving feel normal rather than deviant.
- Invest in autonomy over consumption — the research on income and wellbeing consistently finds that spending that buys time, freedom, and reduced obligation produces more sustained satisfaction than spending on things. Financial freedom is buying the option to work less, choose more, and be less vulnerable — not buying a nicer version of the things you already have.
The Reframe That Changes Everything
The most useful reframe available for the “never feel rich” experience: financial freedom is not a feeling produced by income. It’s a condition produced by the gap between income and spending, accumulated over time. That gap is available at almost any income above subsistence. It’s not determined by what you earn. It’s determined by what you keep — and what you do with what you keep.
The person who earns $60,000, saves 20%, and invests the savings in a low-cost index fund will, over 20 years, produce a financial condition that most $150,000 earners who save 3% will never achieve. The income was lower. The freedom, the resilience, and the options were dramatically greater. That’s the reframe — from income as the primary variable to savings rate as the primary variable. The feeling of “enough” follows the condition of enough. Build the condition first.
The Role of Gratitude and Enough
Research on subjective wellbeing consistently finds that gratitude practices — deliberately acknowledging what is already sufficient in one’s life — produce measurable improvements in reported happiness that are comparable to significant income increases. This isn’t a call to passive acceptance of inadequate circumstances. It’s an observation that the psychological experience of “enough” is partly a practice, not purely a function of the external situation.
The person who defines sufficiency deliberately — “this income level, with this lifestyle, is genuinely enough for a good life” — and invests the surplus in financial security is in a fundamentally different psychological position from the person perpetually deferring satisfaction to the next income milestone. The first person has a destination. The second is on a treadmill with no finish line.
Feeling rich is largely a relative, adapted experience that income alone can’t produce sustainably. Financial freedom — the structural condition of options, resilience, and reduced vulnerability — is producible at most income levels through the savings rate. Pursue the condition, not the feeling. The condition, once built, produces the feeling far more reliably than any income increase ever has.
The treadmill stops when you step off it deliberately — by defining enough, building the savings rate, and measuring progress by financial freedom rather than financial feeling. That’s a decision, not an income level. It’s available now.
