What are the negative effects of getting a high salary?

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    In principle, there’s no downside to having more money. In a rational economic sense, it only increases your optionality.

    That said, the biggest risk, other than finding yourself in a higher tax bracket, is that you find yourself on a hedonic treadmill, which Wikipedia describes as “the observed tendency of humans to quickly return to a relatively stable level of happiness despite major positive or negative events or life changes. According to this theory, as a person makes more money, expectations and desires rise in tandem, which results in no permanent gain in happiness.”

    If you quickly adapt to your higher salary, then it doesn’t make you happier. Worse, you may come to depend on it — in which case you are at a great risk of unhappiness if you lose it. As others have pointed out, that makes it difficult for people to leave high-paying jobs, even if they fall out of love with those jobs and should be able to rely on their savings.

    The “trick” you need to learn to avoid the hedonic treadmill is to not allow luxuries to become necessities. The moment you take something for granted, you stop appreciating it as special, and it stops being an incremental source of happiness. And you’re liable to a loss of happiness if it’s taken away.

    To make this concrete, the best thing to do if you have a high salary is to live well within your means. That way, you get the best of all worlds: you avoid the hedonic treadmill, but you still develop a safety net with your savings. And you probably have enough extra to donate some of that money to causes you value.

    Finally, you may be the kind of person who needs a sense of risk in order to be happy. In that case, don’t ever get a high salary. As much as you enjoy the adventure of chasing riches, you won’t know what to do if you achieve them. Though I suppose you can always double down and risk them in your next adventure.

    Enjoy this first-world problem!

    New Member Answered on August 15, 2017.
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