Money CAN Buy You Happiness!

Contrary to popular belief, money can buy you happiness — if you spend it on the right things. That's the skinny from the New York Times Business section, which last week took a close look at spending habits and happiness. Stephanie Rosenbloom writes that increased spending on leisure, travel, and hobbies tends to make people more satisfied with their lives, but buying Stuff does not.

You don't have to spend a lot to be happy. In fact, simple living often leads to a richer life. The article opens and closes with a profile of Tammy Strobel from Rowdy Kittens, who gave up a solid professional life with all the cars, furniture, and Stuff her boring-but-lucrative job could buy. She's a freelance writer now, living simply with her husband in Portland, Oregon.

Like a lot of people who've shifted away from a consumer lifestyle, Tammy now has more money to spend on what she loves because her needs are small. She's not buying Stuff or keeping up a big apartment. She and her husband swapped their cars (and car payments) for bicycles.

Experiences, not Stuff
More and more people are moving away from conspicuous consumption towards a life of conscious consumption and saving. A recent spate of research is looking at how to squeeze the most happiness from your dollar. What they're finding won't surprise many Get Rich Slowly readers:

  • Spending money on experiences brings you more lasting happiness than spending money on Stuff. For example, a vacation will make your life better, over time, than a new couch.
  • It's okay to think small. Spending on several small treats — like a massage, a good book, or dinner at your favorite restaurant — will bring you more happiness than one big-ticket item like a sports car.
  • Leisure activities like games, sports, hobbies, and entertainment have more happiness value than material goods.

What really makes people happy is connection. When we're engaged in a leisure activity, we're more likely to be socializing with others, forming and strengthening our relationships. It's these strong relationships, not the Stuff we accumulate, that bring us lasting joy throughout our lives.

Experiences also pay off better than Stuff because we tend to color our memories happy. Let's say you spring for that new couch. The day you bring it home, it's perfect. The exact shade, texture, and firmness you wanted. You're in your bliss, sitting on it for the first time.

Fast forward ten years. Now the couch is tattered and stained, and the cushions have gotten lumpy. Remembering how perfect it was doesn't make you happier now; it makes you sad that you're sitting on a bumpy relic of your couch's former greatness.

Let's say instead you'd put that money into an experience. A vacation where you were bitten by mosquitoes, almost missed your flight, and lost your hiking boots at the resort. Ten years later, your mosquito bites are gone, the shoes are long forgotten, and the photographs of the beautiful waterfall you visited still hang on your bedroom wall. The vacation actually gets better with time, as you hold on to the happy memories and forget the hassles.

Finally, experiences pay off on the happiness meter because of their novelty. We grow bored with Stuff and then want more! newer! bigger! better! Stuff. But it's not the Stuff we want more of, really. We're looking to replace the happiness kick we got from the Stuff when it was new. This is why so many of us can be staring at a closet full of expensive clothes and think we have nothing to wear, or restlessly scroll through thousands of songs in our iPods finding nothing we want to hear.

The psychology of spending
The fancy psychological term for this is “hedonic adaptation”. We adapt to Stuff faster than we adapt to new experiences. A vacation, a cooking class, seeing a good play — these experiences are all complex. They take time to digest, mentally and emotionally. When we do them with friends or loved ones, they become part of our relationships with those people, adding yet more layers to the experience and the memories that come out of it.

Frugal happiness seekers can use these principles to their advantage. It doesn't take a lot of money to seek out new experiences. Just going for a walk down the beach with a friend can provide plenty of happiness, with no price tag attached.

Remember that idea of stringing small luxuries together, that I mentioned above? Splurging on a series of small indulgences is worth more happiness than one large splurge.

That kind of spending on frivolous luxuries pushes against the grain of my own non-consumer heart, but it's another way to thwart hedonic adaptation. Buying one large item gives you a burst of happiness that quickly dissipates. While over time you'll also adapt to the flavors at that restaurant you love or the joy of having flowers on your desk at work, a variety of small indulgences will give you many little happy moments.

On the other hand, we can get more happiness out of large purchases by saving for them in advance, rather than buying them on credit. It's not simply that being debt-free is a happy way to be; you'll also get pleasure from anticipating the purchase while you're saving up for it. Once you have your new couch or dream vacation, you'll enjoy it more knowing it's the fruit of your hard work as a saver.

Ultimately, it's our experiences in life that make us happy, and the relationships we have with those who share our journey. Money can be a great tool for getting the most out of our adventures and our time with loved ones, if we know how to spend it right. That means putting our money where our hearts are: spending on the activities and people we love, not the Stuff we're told we have to have.

J.D.'s note: For more on this subject, see the first chapter of my book, Your Money: The Missing Manual. (You can download that chapter for free as an 889kb PDF.) Later today, I'll post a semi-related anecdote about Stuff.

More about...Psychology

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kaitlyn
kaitlyn
9 years ago

I fully agree with this. The best thing I did before moving was almost totally purge myself of Stuff. While there is still more Stuff I would like to acquire (a dining room set may not bring happiness, but folding chairs at a picnic table do bring back pain), I’ve been spending that money on experiences. Seeing plays on Broadway, bowling with friends. I regret none of it.

JonasAberg
JonasAberg
9 years ago

I must say that for me, a new couch would probably be a better purchase than a vacation. In the last couple of years, I have come to enjoy the little things in life more and more. I actually bought a new couch about a year ago and I sit in it every day. I often think about how much I like the new couch over the old one. I did, however, shop around for a good two months before finding it and it cost less than a vacation would have.

Michelle
Michelle
9 years ago

I agree whole heartily with the article. Although I did purchase a couch about 4 years ago, and loved it at the time, I regretted how much I payed, when I could have shopped around even more so, and bought one at a discount store for much cheaper, and still would have had a great buy for the money. As for the experiences of movies, plays, vacations and such, those are the true vices of happiness. I learned that over the years after raising 4 kids as a single parent on a tight, tight budget, which I still live on… Read more »

Red
Red
9 years ago

I agree with this article; however, I think the statement that “money CAN buy happiness” is misleading. You’re talking about two different things. Money can buy a vacation with your family, which will in turn make you happy. But I don’t think it’s accurate to cut out the middle man and say, “Money buys happiness.” It doesn’t. Money is the vehicle that allows us to pay for things that make us happy, but it will not make you happy. I used this example on Budgets Are Sexy once: Say you love movies. So you buy a ticket to the movie… Read more »

Nicole
Nicole
9 years ago

Agree with most of this BUT: If you have a minimum amount of stuff and what you use now or don’t have gives you displeasure every day Then the marginal utility of the new item will be greater than the marginal utility of a trip. If you travel all the time, even in memory the marginal utility of trips may be negative. Last year I was flying someplace almost every week and I am not looking forward to the next trip, nor do I remember the later trips as fondly as the earlier ones or as fondly as staying at… Read more »

Ella @ Frugal Ella
Ella @ Frugal Ella
9 years ago

The best money spent is with people – because in doing that you feel good – instead of on things – because in doing that you only look good. It’s funny that you use a couch as an example…my little brother took an iron to my moms couch when he was 5 – searing iron shaped brands into the upholstery. She used to say experiences are better than things – they used their money for family vacations, a paid-in-cash boat so we could hang out together on the lake, etc. She had that couch for 10 years after it’s branding.… Read more »

Andrew
Andrew
9 years ago

This is a great article, perfectly sums up why I try to avoid Stuff purchases but feel great about family vacations, baseball games, meals out, etc. Very well said!

PerkStreet Jen
PerkStreet Jen
9 years ago

I think the hard thing is not knowing that this is right – we’ve all had a bad experience with a cashmere sweater we regret in the morning, and we’ve all sat at a table full of our best friends laughing and playing [insert game of choice here] and realizing nothing feels better than that moment – but it’s tough to recall that when you’re standing in front of a deeply discounted really cool item. Maybe I’ll try keeping a photo of my friends and I laughing together in my wallet, so when I go to reach to pay for… Read more »

Chickybeth
Chickybeth
9 years ago

Thanks for this post, Sierra! It made me happy just reading it, and it was free 🙂

Meg
Meg
9 years ago

I agree that “stuff” generally doesn’t bring happiness, and that experiences can. But for me, the experiences that bring me the most happiness are *not* vacations in the traditional sense. I’ve had several of those, and remembering them doesn’t really make me happy: either I think to myself, oh, I really wish I could be *there* now (and that makes me unhappy), or I think, that wasn’t so great–I wish I had that money in my retirement fund instead! The experiences that brought me the most happiness at the time, and that bring me the most happiness now in the… Read more »

Another Kate
Another Kate
9 years ago

@Red — Great point.

@PerkStreet Jen — Great idea.

Joanna @ Starving Student Survivor
Joanna @ Starving Student Survivor
9 years ago

I read the article from The New York Times yesterday. I would agree that spending money on experiences can be better than spending on stuff, but those experiences could be empty if they aren’t focused on people and relationships. And many experiences that help people and build relationships can happen without spending money.

partgypsy
partgypsy
9 years ago

I don’t know. I bought a new mattress this year. It has brought me alot of happiness (and back comfort). Maybe all this article is showing that in general, Americans are skewed towards buying more stuff than they need, and neglecting their personal relationships. It’s more a cultural problem than a money one, though they are related.

Brad
Brad
9 years ago

Stuff can most certainly bring happiness. I love playing Rockband, which requires fake instruments and an xbox, but when my brothers and I get together to play we have a blast. My wife and I love to watch movies in the comfort of our home and the mix of a projector, huge screen, and excellent sound system makes for a wonderful experience. Alot of people would surely call this “needless stuff” but it brings us happiness. Anything can bring happiness, it just depends on how it affects you.

Coley
Coley
9 years ago

This general theme seems to be getting a little overplayed and tired on this and other money/happiness discussions. I generally agree with the principle, but I don’t think the distinction between “Stuff” and experiences is as clear-cut as many frugal types would like to believe. We say that the happiness from “Stuff” fades quickly, but the happiness from experience only builds in our memories. What about the experience of acquiring “Stuff”? This ties in with the observation that for many big-time spenders, it’s not the things they’re purchasing that make them happy but rather the process of the acquisition. If… Read more »

Chad
Chad
9 years ago

I agree with Coley. Sometimes spending the day at the mall with a great friend is as much fun as the actual joy you get from the items you may buy there. As mentioned earlier, the buildup and anticipation of a big ticket item really makes you appreciate it more, so I don’t think that stuff is really all that bad, it’s just how you look at it and learn to appreciate it. Also, the question about the boat, when I was young my family had a boat and we spent many summers camping, swimming, boating, skiing etc. on different… Read more »

Nicole
Nicole
9 years ago

@10 Partgypsy said exactly what I was trying to say, but when she says it, it makes sense.

LB
LB
9 years ago

I think it’s very important to remember that there is a base level amount of “stuff” that really is necessary to live one’s life. Deciding between spending money on stuff versus experiences is a luxury that many people simply don’t have. I spent many years at that level of poverty. I always said I wanted to have/make enough money to not have to worry…

partgypsy
partgypsy
9 years ago

I agree with Coley the “experience” versus “stuff” is a huge generalization. I suspect the people writing these articles maybe early on spent too much money on stuff they later regretted, and assume everyone are like them. Personally, I have few regrets on items I’ve purchased (i.e. I wished I hadn’t bought them). Actually most of the shopping regrets I’ve had is buying items I cheaped out trying to save money on, which ended up giving me alot of grief/hassle I could have avoided if I had bought the more expensive/reliable/under warranty item in the first place. Again, spending MORE… Read more »

Des
Des
9 years ago

“The vacation actually gets better with time, as you hold on to the happy memories and forget the hassles.” Ummm…have you ever been on a really bad vacation? I definitely have and I can say with confidence that the bad memories do not turn good with time. I refuse to look at pictures from that trip because even the happy ones remind me of the horrible time we had. If I could trade those memories (and my $1,000) for a couch I would do so in a heartbeat. Experiences are great, but they are not some sort of holy grail… Read more »

elisabeth
elisabeth
9 years ago

If I’m remembering correctly, the article did acknowledge that a basic level of money IS necessary for happiness — , constant worry about being able to pay the rent will not make for a happy person, no matter how great your relationships are. And that may go for things like a good mattress, too!

Rebecca
Rebecca
9 years ago

I agree with the general jist of stuff vs experiences, but why use a couch as your example. Isn’t basic (not excessive or replacing them on a whim because you don’t like the color anymore) furniture part of the basic necessities of everyday life? I have 5 kids whom I love to sit with on my couch (which was a nearly-new hand-me-down from a friend that moved away) and read good books. Maybe choose a more frivolous example next time. But all in all, I get what you are saying. And I get more satisfaction out of life creating free… Read more »

Jenessa
Jenessa
9 years ago

No offense, but I have to admit I am getting a bit tired of the continuous ridiculing of Stuff on this site. I love most of my belongings, maybe its because I never went into debt in the first place to buy them, but maybe not. When you think about it most of our Stuff relates to experiences. My board games, cameras, camping gear, kitchen equipment, books, even my house and car; they can all result in wonderful experiences and many can greatly enhance my experiences and happiness. Sure I could get rid of a lot of my Stuff, but… Read more »

cc
cc
9 years ago

but what if you don’t have a couch?

Andrea Pokorny
Andrea Pokorny
9 years ago

Thank you… I always knew money could buy happiness. =)

But now I know how & why. Makes perfect sense.

Clint
Clint
9 years ago

I don’t think any ridiculing of all STUFF is intended here (see second to last paragraph). It all boils down to mindful spending, whatever stuff or experience makes you happy, go for it–if you can afford it.

Coley
Coley
9 years ago

“I suspect the people writing these articles maybe early on spent too much money on stuff they later regretted, and assume everyone are like them.”

Brilliant. A good percentage of the articles on here read like the perspective of a recovering alcoholic who can’t stop telling the world about the evils of alcohol and how he, and everyone else, is so much better off sticking only to soft drinks.

After awhile, you just want to say “Look, some of us can handle our occasional liquor. And we enjoy spending our money wisely.”

ebyt
ebyt
9 years ago

Obviously money buys happiness. I can only think of a few cases where money doesn’t help. If a loved one is so sick there’s nothing medicine can do, then money won’t make you feel happier. Money won’t fix a broken heart either. Maybe if you’re rich and famous you have to take extra measures to feel secure, but at least you can afford the security. Other than that, though, money can be used as a tool for freedom. I have to say I agree with Jenessa #23. I love my Stuff. I try to reduce buying crap I just don’t… Read more »

SA
SA
9 years ago

I could never understand why spending hundreds or thousands of dollars on a vacation (one or two weeks) could possibly be considered more worthwhile than buying something, like a couch, that serves you for many years.

I read the original article on the Times Web site and thought maybe I was crazy but I see from these responses that I’m not the only one who disagreed with its premise.

Not all Stuff is frivolous, while plenty of “experiences” are ephemeral. Adults are meant to know the difference.

Ruth
Ruth
9 years ago

Sure, life would be meaningless without family/friends. That said, it gives me great pleasure to spend time in my home surrounded by items I have carefully chosen. I enjoy having this “stuff” (whether it’s a couch to sit on, a rug to walk on, or a great food processor to cook with) every day. This is not the same thing as constantly wanting the next big thing (I don’t own an Ipod or Blackberry. and I drive a 13 year old car). It is about feeling happy in your home and satisfied that your money has been well spent. Of… Read more »

KMJ
KMJ
9 years ago

I think there is a hidden pitfall to chasing happiness as the primary goal. A lot of the happiness seekers I know — whether purchasing stuff or planning the next experience/vacation — are just distracting themselves. Happiness is not an identity, it’s a temporary feeling.

An observation: a lot of artists and musicians produce their best works when they are struggling — and lack inspiration once they have “made it.”

Ken
Ken
9 years ago

I could not agree more with this post. It’s the memories that mean the most in the long run. Let’s get off the ‘stuff’ mobile and have experiences that last much longer and bring more happiness long term. Great post!

myfinancialobjectives
myfinancialobjectives
9 years ago

I agree with the point of this article. Money can’t buy you happiness in that if you use it to try and replace friends, family, relationships. But money can buy you happiness if you spend it on stuff to enrich your current life. You looooveee to play tennis. So use money for tennis lessons, a new racket, a tennis league, etc. Simple as that!:)

J.D. Roth
J.D. Roth
9 years ago

@Coley (and others) You have a point that sometimes these types of articles read like they were written by recovering spendaholics. In most cases, they were! And maybe that’s a stage that most of us who are recovering have to go through. Does that make sense? Long-time readers are well-aware that I went through my own stage of cheapness (as opposed to frugality) after I paid off my debt. It’s taken me time to find balance. Now I’m able to spend on the stuff I want without getting out of control. But I hope that GRS doesn’t always read like… Read more »

chacha1
chacha1
9 years ago

Hey, I love a lot of my Stuff too – but I’m at least willing to admit that over the years I have spent A LOT of money on Stuff that I no longer love – in fact, that I no longer even own – and that I wish I’d said “no” to. And I wish I had thought more deeply about these issues twenty years ago, BEFORE spending all that money on Stuff. Re: travel: My mother hates it. She’ll find something to complain of in any trip, whether it’s just down the road to a car show or… Read more »

Budgeting in the Fun Stuff
Budgeting in the Fun Stuff
9 years ago

I couldn’t agree more. When my husband and I first got out of college, we were broke but we experiencing the newness of real adulthood and having a fantastic time. Two years later, we were making good money and finally buying the stuff we thought we wanted – we were happy but not as fulfilled as before. Then we discovered hobbies and vacations and made some close friends – it’s like night and day. We spend about the same, just on different things. I’ll go spend $13 to play Bingo with friends for 3-4 hours. We’ll splurge on the $2000… Read more »

Amanda
Amanda
9 years ago

I’m bored of articles on this topic. I don’t like the rehash of an article I just read! I usually like sierras columns but this one isn’t her unique article.

Jaime
Jaime
9 years ago

I like spending my money on both money and experiences. The best of both worlds. I like to buy consciously and frankly I get the same enjoyment out of my stuff that I get out of experiences. I don’t own an excess amount of stuff either. Experiences are nice but they kind of fade, I have conflicted feelings about that article on one hand that couple is doing what works for them, on the other hand, it seems sort of extreme. Now I don’t own a lot of stuff but it seems they went from one extreme debt to another… Read more »

Nicole
Nicole
9 years ago

Chacha — I don’t think there’s ANY reason to attack “stuff apologists.” Like partgypsy was saying back in #10, the average person probably has too much stuff and doesn’t travel enough. That situation is not true for everybody. Seeing other people’s experiences and thoughts, including people who have heard the “stuff doesn’t make happiness” and disagree is adding a deeper layer to the question, not stopping people from thinking about these issues. Just because something is true on average doesn’t make it true for everybody and figuring out why things are true for some people and not for others leads… Read more »

Coley
Coley
9 years ago

“Entertainment does not equal experience. Sitting at home and watching a movie, even if it’s a great movie on a terrific home theatre system, is not an “experience” in the same sense that going out to see a live play is an experience. Listening to even the best recording on the most state-of-the-art audio system is not an “experience” in the same sense that going out to a live concert is an experience.” I’m going to need some more explanation on this one. Otherwise I disagree wholeheartedly. JD, I can’t imagine how difficult it must be to keep the right… Read more »

Jason Beck
Jason Beck
9 years ago

If “doing” rather than “watching” defines experience, then watching a play is no more an experience than watching a screen. But I think we’re arguing about the wrong thing. Stuff vs. Experience is awfully tough to settle because there is no firm definition. Obviously the perspectives on definition vary by opinion! Connections, relationships, memories. Purpose in life, accomplishment, advancement. These are things that have deep value that speak to our core principles. How you build and acquire them will vary greatly. Buying electronics may give you a brief (but fading) sense of accomplishment, but holding a party that everyone loves… Read more »

partgypsy
partgypsy
9 years ago

Nicole – that’s a riddle wrapped in a mystery inside an enigma. There is probably no way to have a rule to how everyone should spend money that everyone would agree with, because the fact of the matter is everyone has different values, and that’s ok. To me, I know I’ve looked aghast at friends who sign up their children for expensive camps, or take a vacation they save up for all year, but again THAT’s what’s important to them. Stuff versus experiences is a false dichotomy. But here’s my attempt. The biggest correlation is between happiness and your physical,… Read more »

Frugal Texas Gal (Barb)
Frugal Texas Gal (Barb)
9 years ago

I have a huge problem with equating frugality or even mindful spending with so called “stuff”. I also have a huge problem with the assumption that the experiences are always better than the stuff. This is especially true when it comes to things that enrich our hobbies or interests or feather our homes. Frugality is not about minimalism or simple living. Some folks enjoy that, but thats not all its about. dont get me wrong, I love traveling, movies and the like. but I also enjoy my really high end comfy mattress, my very nice sctional couch with pillows and… Read more »

Nicole
Nicole
9 years ago

@42– Since I’m an economist, the rule is obvious to me… You spend on A instead of B until the marginal utility of A is less than the marginal utility of B. And everybody gets different utility curves. But that’s kind of hard for me to explain without graphs and calculus and jargon… And it’s a bit simplistic because people don’t have full information and their happiness now is different than their happiness later etc. etc. Still, the thought of travel right now makes me shudder and the new mattresses we just got make me happy. And that’s because the… Read more »

Kai Jones
Kai Jones
9 years ago

I’d like the challenge the unthinking acceptance of the study finding about things and happiness. Using tools from cognitive therapy, I manage to take pleasure in my things for a very long time. Every time I use my knitting tools, I remember how lucky I am to have them, and how much fun it is to knit. I drive a 6 year old car and every time I get into it I remember how hard I worked on choosing this car and I think about how much fun it is to drive and how well it meets my needs. My… Read more »

Techbud
Techbud
9 years ago

Totally agreed. Took the family on a cruise a few years back and we all can’t stop talking about it, the things we did, the food we ate, the fun we had. Certainly want to have nice stuff, but don’t need the best or most expensive stuff!

Rosa Rugosa
Rosa Rugosa
9 years ago

I think it’s all about balance. And there’s a difference between Stuff and stuff. We do a fun weekend getaway every Jan. in Portland, ME. with a great group of friends. We stay at a lovely hotel at off-season prices, and we eat, and we drink, and we shop, and we are very merry! It is money well spent. For me, the thing to be mindful of is to be sure I don’t come home with a bunch of pretty crap that I don’t really want or need after the shopping rush wears off. But I have many treasured items… Read more »

David/moneycrashers
David/moneycrashers
9 years ago

The most important line in the post—

Spend money on experiences, not stuff.

Hands down the best advice there is

Lainey
Lainey
9 years ago

I think I like experiences better than stuff, but sometimes, as others have mentioned, money helps you buy “stuff” that you can use to have experiences.

For example, someday I would like to buy an RV. I want it to go camping with my husband and have quiet time and experience nature. It’s “stuff,” but it would help us to have experiences.

Carrie
Carrie
9 years ago

Excellent post. I’m a fan of M.P. Dunleavey’s book, Money Can Buy Happiness. Me, I would be much happier with a good cleaning service. Someday!

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