Money and Happiness: 1. Buy Experiences

I am “all about” people, myself included, living happier, and more joy filled lives.  I want my expertise to be around money AND happiness.  If you read my article last week, I said that studies show that more money generally does not correlate to MORE happiness. Yet this book Happy Money: The Science of Smarter Spending by Elizabeth Dunn and Michael Norton, says that money can buy more happiness IF you know how to spend it correctly.

This book presents that it is not how much money you have that will increase your happiness but HOW you spend the money that you do have that can make all the difference in your happiness.  This book is all about the behavioral science of HOW you spend your money CAN increase your happiness.  Woo hoo!

What is the point in having more money if you are not happy / happier?

My next few articles are going to be on this topic and share highlights from the book and my own thoughts around their findings.  The book presents how you can get more happiness for your money by following these five spending principles:

1. Buy Experiences
2. Make it a Treat
3. Buy Time
4. Pay Now, Consume Later
5. Invest in Others

So today I am going to focus on 1. Buy Experiences.

I remember when I was younger, I thought it was silly to spend money on experiences.  I thought, “Why go out to dinner if afterwards you have nothing to “show” for it.  There was no tangible thing that you had to show for the money you spent.  I thought spending money on physical things was better than buying experiences.  I have definitely changed my tune on this. (Everyone who knows me, knows one of my favorite things to do is to go out to eat with my husband – or at least it used to be before the pandemic.)

One question from the book was to think of purchases that you have made with the objective of increasing your happiness.  (I don’t think people consciously ask the question, “Will this purchase increase my happiness?” before buying something. It may be a good thing for each of us to start doing though.) The researchers had the participants think of one purchase that was a tangible object, and another that was an experience and asked, “Which one of these made you happier?”  The study found that Americans reported the experiential purchase made them happier than buying an object.

When researchers linked spending choices to happiness, they found only one category really mattered – “leisure.” This could be trips, movies, video games, sporting events, concerts, etc.

Another study looked at these two types of purchases (material versus experiential) and how closely they reflected people’s true selves.  The results from this experiment showed that experiences much more closely reflected people’s interests and what they cared about.

The book discusses (and I agree) that experiences create more lasting happiness due to the multiple parts of the experience.  First, there is the “dreaming,” planning and anticipation for the experience before hand, then the actual living it in the moment, and finally the memories and stories you get to keep after the experience.  The research showed that many people seem to forget or diminish the negative aspects of an experience after it is over.  And many times the negative aspects or the things that went wrong are definitely what make great stories after the fact.  I think most of us can attest to that.

When people buy things it is much more common to have buyer’s remorse and regret with these purchases.  Often our enjoyment of the item decreases with time. Studies show that even if your satisfaction with the purchase doesn’t decrease, your happiness in life usually does not increase after the purchase – even for something as big as a house. Material things do provide delight.  It is usually immediate but the studies show (and maybe you have found) that the material “high” fades and the happiness from an experiential purchase lasts much longer.

I think it is important to note that the difference between physical things and experiential purchases is not always black and white.  A book can be a physical thing and / or it may be an experience. Music is another example that could be either.  Part of it depends on your perspective and also what you do with the purchase.  People often buy souvenirs to help remind them of experiences.

The book gave specific rules that help with experiences increasing happiness:

• The experience brings you together with other people, fostering a sense of social connection.
• The experience makes a memorable story that you’ll enjoy retelling for years to come.
• The experience is tightly linked to your sense of who you are or want to be.
• The experience provides a unique opportunity, eluding easy comparison with other available options.

It is interesting to me how my logical mind used to think buying physical things was better than experiential purchases because you didn’t have anything to show for it afterwards.  Now I know that what matters most really aren’t things.  It is love and connection and joy created and enjoyed in the anticipation, in the experience, and in the memories and stories.  These can last forever even though you can’t physically touch them.

Think about HOW you spend your money and how you can maximize your happiness.  Isn’t that what we all truly want?  To be happier and to have more joy in our lives?  Let’s keep that as the focus and priority in our lives.

In summary, your happiness is (generally) not related to how much money you have.  Happiness has much more to do with WHAT you do with what you have and HOW you choose to spend it.

P.S. The picture at the top is of me (back row 3rd from right) hiking in Yosemite with a group of friends – a very fun and memorable experience.