When we spend money on ourselves and the people we care about, we’re doing more than simply buying things. On a deeper level, our ultimate goal is to create feelings of happiness, satisfaction and well-being.
But are we really spending our money in ways that achieve those results and help us live our best lives? The answer, unfortunately, is probably not. Many of us spend in ways that do little to help us get what we truly want. As one world-famous Japanese “tidying expert” might say, our spending habits don’t spark joy in us.
But don’t sweat it. The good news is that we can shift our spending habits and patterns so our purchases deepen our happiness and help us create more meaningful lives.
The key: Focus more on experiences and less on physical stuff. Here’s why that makes sense—and how to do it.
The value of experiences
Our culture tells us that buying lots of stuff will make us happy. And that is often true—but only up to a point. Ever notice how quickly that rush from having a new gadget, appliance or even car fades, and you find yourself looking to make a new purchase so you can regain that thrill?
That’s because acquiring more and more items doesn’t really do the trick. Research published in the Journal of Positive Psychology reveals that people who spent money on experiences rather than material goods were happier and felt the money was better spent.
Why? There are many factors at work here. One big one: The excitement we often get from purchasing things tends to diminish quickly because we get used to seeing the items every day and start taking them for granted. In other words, we adjust mentally, and we do so pretty fast. In contrast, experiences—and the joy and memories they bring—can give us stronger feelings of satisfaction. That can be true even if the experience is fleeting and doesn’t last nearly as long as the physical item that we can put in our pocket or our home.
Importantly, the good feelings we derive from our experiences tend to last well beyond when the experience happened—giving us a longer-lasting sense of satisfaction than we might get from an object that quickly blends in with our environment.
Think of it this way: Having an up-close-and-personal visit with an elephant in an African safari park for 10 minutes just might stick with you longer than the feeling you get from
upgrading to a better smartphone.
Other reasons our brains respond better to experiences, according to research from Cornell University and elsewhere, include:
- A better sense of self. Even if you love your great new car or phone, it’s an item that is separate from you. Experiences, however, are more a part of who you are as a person. Therefore, they can become a bigger driver of how you self-identify (as a person, a parent, a spouse and so on).
- Stronger social relationships. Buying an item is often a solitary experience (especially in the age of one-click online shopping from our phones). In contrast, we
often participate in experiences with other people—friends, family, co-workers and the like. As a result, experiences tend to foster and enhance social bonding that may
strengthen our mental and physical health. Shared memories from shared experiences can be recalled among the people who took part in them—as well as told to others who weren’t part of the experience. In contrast, there’s only so much social storytelling involving a big-screen TV.
- Greater surprise value. When we buy a product, we generally know what we’re getting and what to expect—especially if you’re a savvy shopper who does his or her homework. However, experiences may be more likely to present unexpected moments and surprises—a herd of bighorn sheep suddenly crossing your path in a national park, for example—that stick with you. New and novel experiences can also change your perspective on your life or your culture, or change your beliefs, in ways that goods generally can’t.
Become a savvy experiential spender
Let’s say you’re on board with the idea that more of your disposable income should go toward experiences than toward goods. How do you become a savvy buyer and consumer of experiences so that your spending can potentially maximize your happiness and well-being?
Here are four ideas—and one important warning:
1: Think small and frequent.
When we think of meaningful experiences, it’s easy to think only big and expensive—such as a grand vacation once every year or two. But spending on smaller experiences more frequently could give you more satisfaction and bang for your buck. This may be because relatively minor events and purchases tend to have more novelty and bring more of a burst of excitement. Small but frequent bursts can help keep our brains from getting bored.
2: Give experiential gifts.
Because of our social nature, spending money to benefit others tends to increase our own happiness—sometimes even more than when we spend money on ourselves. And since experiences tend to generate higher and longer-lasting levels of satisfaction than goods, one great way to rack up a win-win is to give experiences for birthdays, at holidays, or whenever you want to show appreciation and love for someone. You can include yourself in these experiences—a spa weekend for two, for example—or you can go the fully altruistic route and give an experience that is entirely focused on the recipient.
3: Rent to diversify your experiences.
Consider keeping your experience options open and flexible to stave off mental adjustment. For example, say your goal is to engage in experiential exotic travel. It might make more sense to rent properties in multiple locations rather than own one property that commits you to that single location. Renting can help ensure your vacations remain new and fresh, so you don’t adapt to your surroundings in ways that cause you to take them for granted.
Bonus: Renting properties (or sailboats, horses or other luxury experiences) means you don’t have to deal with the headaches of ownership, such as maintenance and upkeep. The exception, of course, is if you’re certain you want to put down stakes in one locale and consistently visit that place—in which case, buying a home or second home there may be the better option.
4: Spend on learning-based experiences.
Many of us are lifelong learners who want to keep expanding our knowledge and giving ourselves new challenges. That can be especially valuable to our cognitive health as we age. So consider targeting your experience dollars on classes that teach you a new hobby or skill set. You might build on existing interests or tackle an entirely new area—ranging from knitting to mountain climbing. The experience of learning new capabilities can boost your happiness while giving you more social outlets and introducing you to more like-minded people to connect with.
Warning: As valuable as experiential spending may be to living a great life, it can fail to meaningfully amplify your happiness if you don’t spend thoughtfully. That memorable music festival you attended last year, with all-access VIP tickets and luxury accommodations? Or that fun-filled trip to Disney World? Even that five-star restaurant you adore? They just might start to feel a bit dull if you go too often. The upshot: Even experiences can lose their ability to amaze if they’re repeated too often and you start to get stuck in the same old rut.
Don’t shun the stuff, however
None of this is to say you need to stop buying physical goods that you can hold in your hands. Objects can and do make us happy, too.
That said, one key to getting the most pleasure and happiness from buying stuff may be to focus more on acquiring goods that help facilitate meaningful experiences than on buying goods that don’t.
Example: Buying high-end mountain bikes for the family can lead to more outdoor, endorphinstimulating biking experiences in fun, interesting locations. Even buying a tricked-out television can be rewarding—if, for example, it causes you to binge-watch shows or movies that you end up talking about with friends.
In short, goods that help create happy social experiences can be money very well spent.
You can spend your money in a huge number of ways. But if you truly want to live your best life, consider focusing your spending on the types of purchases that can potentially maximize your happiness—and the happiness of those around you.
Securities offered through LPL Financial, Member FINRA/ SIPC. Financial Planning offered through M Financial Planning Services, a registered investment advisor and separate entity from LPL Financial. VFO Inner Circle and AES Nation, LLC are not affiliated with LPL Financial.
ACKNOWLEDGMENT: This article was published by the VFO Inner Circle, a global financial concierge group working with affluent individuals and families and is distributed with its permission. Copyright 2020 by AES Nation, LLC.
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