The Reason Why You Should Spend Your Money On Experiences, Not Things

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Here’s the gist: You don’t have infinite money. Spend it on stuff that research says makes you happy.

We are all in pursuit of happiness, and we attribute happiness to so many things and goals. Others believe happiness comes with success, and they measure success in either becoming wealthier, or more popular. Indeed, material things and fame top the list of what people believe will make them happy.

We won’t argue. We know that money can make you happier, though after your basic needs are met, it doesn’t make you that much happier. But the toughest and the biggest question is: How do we allocate our money (which for most is a limited resource)?

There’s a very logical assumption that most people make when spending their money: that because a physical object will last longer, it will make us happier for a longer time than a one-off experience like a concert or vacation. Is this correct?

Well, according to recent research, it turns out that assumption is completely wrong.

Money buys us happiness… up to a point.

A psychology professor at Cornell University who has been studying the question of money and happiness for over two decades says that one of the enemies of happiness is adaption. Dr. Thomas Gilovich asserts that when we buy things to make us happy, it is true that we succeed. But only for a while. “New things are exciting to us at first, but then we adapt to them,” he added.

Dr. Gilovich suggests that instead of buying expensive things like an iPhone or a new car, spend your money on experiences like going to art exhibits, doing outdoor activities, learning a new skill, or traveling.

Dr. Gilovich findings are the synthesis of psychological studies conducted by him and others into the Easterlin paradox, which found that money buys happiness, but only up to a point. How adaptation affects happiness, for instance, was measured in a study that asked people to self-report their happiness with major material and experiential purchases.

Experiential purchases tend to make us happier in the long run.

In a study conducted among people who were asked to self-report their happiness with major material and experiential purchases (e.g. travelling, tours, learning new skills, etc.) it was found out that initially, their happiness with those purchases was ranked about the same.
But over time, people’s satisfaction with the things they bought went down, whereas their satisfaction with experiences they spent money on went up.

It’s counterintuitive that something like a physical object that you can keep for a long time doesn’t keep you as happy as long as a once-and-done experience does, isn’t it? At first glance, it seems so. It seems counterintuitive.

Ironically, the fact that a material thing is ever present works against it, making it easier to adapt to. It fades into the background and becomes part of the new normal. But while the happiness from material purchases diminishes over time, experiences become an ingrained part of our identity — from memory we relive until it becomes ingrained to our identity, becoming a part of who we are (things like “what I’ve been through”; things worthy of sharing)

“Our experiences are a bigger part of ourselves than our material goods,” says Gilovich. “You can really like your material stuff. You can even think that part of your identity is connected to those things, but nonetheless they remain separate from you. In contrast, your experiences really are part of you. We are the sum total of our experiences.”

Opening up about a negative experience can also be a source of happiness.

In another study conducted by Dr. Thomas Gilovich, it was found out that that if people have an experience they say negatively impacted their happiness, once they have the chance to talk about it, their assessment of that experience goes up!

This is due to the fact that something that might have been stressful or scary in the past can become a funny story to tell at a party or be looked back on as an invaluable character-building experience.

Shared experiences connect people more, than shared consumption.

Shared experiences connect us more to other people than shared consumption. This is generally true such that you are much more likely to feel connected to someone you took a vacation with in Boracay than someone who also happens to have bought a 4K TV (perhaps an exception would be car-lovers who’d gather in a social media group to talk about their cars).

“We consume experiences directly with other people,” says Gilovich. “And after they’re gone, they’re part of the stories that we tell to one another.”

And even if someone wasn’t with you when you had a particular experience, you’re much more likely to bond over both having hiked Mt. Apo, swum with whale sharks in Sorsogon, or watched an episode of GGV on a particular Sunday night.

Here’s another reason to invest more on experiential purchases than on material purchases: You are much less prone to negatively compare your own experiences to someone else’s than you would with material purchases. A different study conducted by researches Ryan Howell and Graham Hill showed that it is easier to feature or compare materials goods than experiences. when you feature-compare something, you ask about its attributes and value, say ‘how many carat is your ring?’, or ‘how fast is your laptop’s CPU’, or “how much is your phone, is it more expensive than an iPhone 6’. And so what? Well, since it is easier to compare material things, people tend to do so very often.

“The tendency of keeping up with the Joneses tends to be more pronounced for material goods than for experiential purchases,” says Dr. Gilovich. “It certainly bothers us if we’re on a vacation and see people staying in a better hotel or flying first class. But it doesn’t produce as much envy as when we’re outgunned on material goods.”

Towards more experiential pursuits that promote greater happiness.

Dr. Thomas Gilovich and his peers’ research tells us one thing, and it resounds very clearly: If we want to maximize our happiness return on our financial investments, invest on experiential pursuits.

“By shifting the investments that societies make and the policies they pursue, they can steer large populations to the kinds of experiential pursuits that promote greater happiness,” write Gilovich and his coauthor, Amit Kumar, in their recent article in the academic journal Experimental Social Psychology.

If society takes their research to heart, it should mean not only a shift in how individuals spend their discretionary income, but also place an emphasis on employers giving paid vacation and governments taking care of recreational spaces.

“As a society, shouldn’t we be making experiences easier for people to have?” asks Gilovich.

Nonetheless, on a day-to-day basis, one can increase their happiness levels by heeding a few important reminders, and embodying some noble values.

1. Expect that happiness is not one-size-fits-all.

What makes me happy won’t necessarily do it for you, and vice versa. That’s simple, and that’s true. In as simple as a tomato sauce, people vary on their preference, and that’s very true with what makes us happy, too.

2. Stop chasing things like success, fame, and money.

Well, we don’t mean to never pursue these goals. It’s just that, umm, don’t expect them to make you SUBSTANTIALLY HAPPIER than you are right now. You know that money can’t buy you happiness for long.

3. Keep challenging yourself.

You love your work? Probably it is because you are good at it, and you’ve been doing it for a while, and you probably have experienced “flow,” that state where you get so lost in what you’re doing that you forget yourself and everything else. That state of flow is where true happiness lies, says psychologist Mihaly Csikszentmihalyi, and we can also find it when doing something creative, or even something recreational. But only so long as we keep challenging ourselves. Boredom is the opposite of flow. Now, you know.

4. Be generous.

Social scientist Michael Norton recounts a fascinating experiment that proves–contrary to popular belief–that money can buy happiness, so long as you spend it on someone other than yourself. Not only will you have made someone else happy, you’ll have made yourself happy too, a happiness buy-one-get-one-free special.

5. Be grateful.

Gratitude is a choice. and it will make us happier. While it is common notion that being happy will make us feel grateful, actually, it’s the other way around, according to a Benedictine Monk David Steindl-Rast. He says being grateful is what makes us feel happy.

6. Train your mind.

This trick has been around for centuries. Guess what it is! Gotcha – -meditation. It takes time but it’s worth doing. Brain scans show that monks who are practiced at such meditation show happiness activity in their brains that is “off the charts” compared with everyone else (and we thought they’re unhappy, knowing they don’t eat French fries at McDonalds).

7. Smile!

Research shows that if you smile, even if you are not really happy, the mere act of smiling or at least pretending to smile, will actually make you happier that instant! However, genuinely smiling all the time has a good impact on your health in the long run. Research shows that people who are happy and are inclined to smile more have better health, better marriage and other relationships, and increased life expectancy. So, keep it pasted, your smile.

8. Tell the truth.

Hiding something, especially over a long time is not healthy for your emotional health. So, have the courage to say what you feel you have to say. Be truthful, and be brave to open up about the things you think your voice matters. Have a voice, and speak up about it as often as you can.

 

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