Spend Money on Experiences Not Stuff
You deserve a treat. What should you spend the money on?
A. A new pair of shoes
B. The latest HDTV
C. Diamond earrings
D. A new couch
E. A trip
F. Tickets to a concert
G. A romantic meal at a restaurant
According to the latest research, answers E, F, or G may be your best bet. Why? Research suggests that, in the long run, experiences make people happier than things.
“One of the most common things people do with their money is get stuff,” said Michael Norton, a Harvard Business School professor and co-author of the book Happy Money: The Science of Smarter Spending. “But we have shown…with research that stuff isn’t good for you. It doesn’t make you unhappy, but it doesn’t make you happy. But one thing that does make us happy is an experience.”
That’s in part because the initial pleasure of purchasing a new object, such as a new TV or pair of shoes, quickly wears off. Buying things has an instant drug-like effect – immediate and gratifying at the time – but the satisfaction doesn’t last long. Material objects, after all, depreciate and deteriorate. Memories of experiences, on the other hand, continue to provide feelings of joy and happiness long after the event happens. In fact, fond memories typically get better as time passes.
Think about it. After seeing a new necklace day after day, the newness wears off and the joy fades away as we become accustomed to seeing the jewelry and become bored with it. However, small, frequent pleasures tend to be different every time – whether it’s reading the latest summer blockbuster, a cup of tea with a friend, a weekend trip to the beach, or a picnic with our loved one. Because each experience is unique, instead of feeling bored, we treasure the memory.
My parents loved to travel when they were younger and often told me they never regretted spending money on a trip somewhere new. I took their advice to heart and if my husband and I had to forgo a new couch for a vacation – so be it. A word of warning, however, my parents, nor my husband and I, ever went into a debt for a trip. When you come home facing credit card bills you can’t pay off, it quickly saps the joy out of those memories.
In fact, several small indulges like a Starbuck’s latte or pedicure, might be better than one big-ticket item, such as a sports car or European vacation. The frequency of pleasures may be more important than the size.
For example, maybe you dream of a lakeside cabin or beach house with great fishing and spectacular sunsets. What you don’t think about are all the plumbing disasters or the countless long drives home with kids fighting in the back seat of the car. Or all the monthly expenses that make you feel even more stressed out. How about renting a cabin for a weekend with all the pleasure and none of the headaches? Instead of purchasing a sports car, consider renting a convertible for a weekend trip or while on vacation. You can have all the fun without the burden of huge car payments or expensive repair costs.
After all, when someone asks you what was the best part of your life, is buying the latest electronic gadget or a new ring the answer? Most likely, you would share an experience that you cherish.
That’s because we are the sum of our experiences and memories, not the sum of our possessions.