A few weeks ago, I was browsing the internet when I stumbled onto a decade-old TED Talk from psychologist Barry Schwartz. The talk, aptly named , aimed to deconstruct how much affluence – and the choice it brings to our lives – affects our society.
Schwartz spoke of many frustrating truths almost anyone can relate to – the madness of shopping for salad dressing in a store where there are 175 different flavors and brands, or choosing among 285 varieties of cookies. At the store Schwartz shops at alone, he says, there are 75 different types of iced tea to buy, along with 230 different soups and more than 40 types of toothpaste.
Schwartz goes on to complain that his local electronics store offers 6.5 million different ways to build a stereo. That’s not an exaggeration. And when you buy a cell phone these days, there are hundreds of options available, too many upgrades and accessories to keep track of.
“Life is a matter of choice,” says Schwartz. “But, is this good news or bad news?”
Most of us would assume that the more options we have, the better. But Schwartz cites research showing that an overabundance of choice doesn’t actually make us happier. Instead, it can leave us feeling confused, disappointed, and often paralyzed.
With so many choices, people find it difficult to make any decision at all. And even if we do manage to overcome the paralysis of overanalysis and make a choice, we end up less satisfied with our selection than if we had fewer options to choose from.
It’s not that we don’t like the salad dressing or cookies we chose for our evening dinner, he says. It’s just that, with so many other options, it’s far too easy to second guess our decisions — to imagine that a different choice might have been better. (Newer research on this subject , but it still appears that too much choice can create consumer confusion and regret in some situations.)
Schwartz goes on to argue that “the secret to happiness is low expectations” – and having fewer options would be better for everyone.
Simply put, when you don’t have as many choices, you don’t have to fret over insignificant trade-offs like the brand of tea to buy or which toothpaste is marginally better. And when you’re not wasting brainpower to choose from 85 different cell phone plans and 6.5 million different stereo configurations, you can spend more time actually enjoying life.
Personal Finance and the Paradox of Choice
Listening to this talk, I couldn’t help but draw parallels between the psychologist’s complaints and the broader concept of personal finance.
In a world where we are plagued by too many salad dressings, laptop computers, and beers to choose from, we are also overwhelmed with countless personal finance decisions that may or may not add value to our lives.
You can invest in your work-sponsored 401(k), or on your own. But, how much should you contribute, and which funds should you choose?
Schwartz himself even referenced a study that showed that the more fund options workers had to choose from within an employer-sponsored 401(k), the less likely they were to participate at all. And this was despite the fact that not participating meant leaving some hefty 401(k) matching funds on the table. When confronted with too many investing choices, many workers are so overwhelmed they ignore it altogether.
And who can blame them? Many say a 401(k) won’t be enough to retire on anyway, which is why you should also invest in a Roth IRA or traditional IRA if you can. A whirl around the internet will tell you to explore investing in real estate, peer-to-peer lending, real estate crowdfunding sites, precious metals, bonds, CDs, penny stocks, Bitcoin, hedge funds, and your own small business.
Faced with all these choices, many people just do nothing – or worse, they choose one investing option like their 401(k) and spend their entire working lives wondering if it’s good enough.
But our paralysis and ineptitude doesn’t end there, as we’re also plagued with too many decisions pertaining to how to spend the money we earn.
Should you buy your forever home now? Should you buy a starter home and upgrade to a forever home later in life? Should you get a 30-year mortgage or a 15-year loan? A fixed-rate loan, or an adjustable-rate mortgage?
Should you pay off your mortgage early, or invest that extra cash instead? Should you get a HELOC to upgrade your kitchen now, or save up the cash over several years to avoid debt?
Should you finance a new car in an effort to avoid costly repair bills? Or, should you drive your older model until the wheels fall off (hopefully not while you’re in it)?
The list of decisions we make goes on and on, making all of us guess and second-guess ourselves and if what we’re doing is good enough.
Too Much Choice: How Peer Pressure Makes Things Worse
But, it gets worrse. As someone who writes about personal finance, I’ve also noticed how peer pressure – how the Joneses – make our spending decisions overly complex. From the shows we watch to the people we call our friends, most of us are bombarded with pressure to keep up and keep getting better all the time.
If you want to see what I mean, turn your television to HGTV for an evening. On shows like “House Hunters,” you’ll find young people in their 20s and early 30s managing huge down payments on homes that cost hundreds of thousands of dollars, only to gut and remodel them with fancier upgrades than most of us can afford.
You’ll see couples bickering over the merits of concrete countertops or granite. Cherry or maple cabinets? Jacuzzi tub or soaking tub? Distressed wooden floors or carpet? And, don’t you need a three-car garage? A man-cave? A craft room? Dual walk-in closets?
If you don’t fall into line and at least pine after these upgrades, people in your life could very well question your sanity. Recently, when I wrote a post on home upgrades I’m not really willing to make, readers chimed in to change my mind.
I should at least shop around to see if I could get a better deal on windows, one said – even after I wrote an entire post about how I’m fine with my old ones. And I should “upgrade my guest bathroom so my guests feel more welcome.” Or something like that.
My husband and I recently had to replace our cell phones. When I told the guy at T-Mobile I didn’t want anything fancy, I could practically see his eyes glazing over in real time.
And, inexplicably, I’ve had people comment on my tiny, sapphire wedding ring — only to imply my husband doesn’t love me very much, just like I’ve had people ask why we don’t upgrade to a newer car (and why we share one).
I’ve been there, you’ve been there, we’ve all been there. When it comes to how we spend our money, there’s no shortage of people lining up to give their unsolicited opinions and advice. If we listen to their advice, we can wind up spending countless thousands of dollars just to keep up with their demands. We buy things we don’t really want. We spend money to keep up appearances when, internally, we couldn’t care less.
When we listen to what others think about our money – feeding us even more suggestions about our financial decisions – we can wind up succumbing to the negative impacts of too much choice.
It’s Okay to Have Low Expectations
Out of the entire talk Schwartz gave, a single line continues to stick with me.
“The secret to happiness is low expectations,” he said, half-jokingly but half serious as a heart attack.
If I’m being honest with myself, I think there’s a ton of truth to this idea that expecting more out of life tends to leave us disappointed and bitter. By expecting less, on the other hand, we may set ourselves up to be happy with what we have.
Remember the days when there was only Ranch and maybe French dressing to choose from? When there were two cell phones on the market, both huge and clunky and hardly usable, but we didn’t care because we were just happy to have one at all?
Remember when nobody had granite countertops, and stainless steel kitchen appliances were unheard of? And nobody seemed to care?
I remember those days, fondly in fact. But I also refuse to keep those innocent, blissful days as part of my past.
It’s 2017, and I still don’t care what I drive or what I wear for the most part. I don’t care if my guest bathroom is up to snuff for our annual visitors, and I don’t care if my home’s windows are 30 years old.
I don’t care if I wear $1 flip-flops from The Dollar Tree, or if I still have garage-sale silverware I bought before my wedding. I don’t care if my bedroom dressers are old and worn, or if I have peel-and-stick flooring in my master bathroom.
And if you care about those things, well, I don’t care about that, either.
Sometimes happiness is a choice we make. We choose to be happy with what we have. We choose not to let our overwhelming choices in life leave us bitter and unfulfilled. And we choose to spend our money how we want instead of letting other people’s choices pressure us into falling in line.
Maybe we have too many choices in life, and maybe we should just ignore them. By lowering our expectations, maybe we can feel richer than ever before- regardless of how wealthy we appear to others..
And maybe, just maybe, how we feel about ourselves and our lives is all that matters anyway.
Holly Johnson is an award-winning personal finance writer and the author of . Johnson shares her obsession with frugality, budgeting, and travel at .