How to Spend Your Way to Happiness

A photo of a pregnant woman meditating for article on mindful spending

You know the old adage “money can't buy happiness”? Researchers Elizabeth Dunn, Dan Gilbert, and Timothy Wilson say it's a myth. Drawing on empirical research, they've identified key ways that people can get more bliss for their buck.

The link between money and happiness has been studied for decades, and the result is always the same: Money does buy happiness — but less than most of us think. After a certain point — having basic needs met and a little “play money” in your pocket — having more money doesn't create more happiness. But Dunn, Gilbert, and Wilson wanted to know why.

The fuzzy, feel-good answer is that the things that make us the happiest — love, friendship, and the like — can't be bought. While the authors admit this is a lovely sentiment, they also found that it's wrong. They published the results of their research in a paper aptly titled, “If Money Doesn't Make You Happy Then You're Probably Not Spending It Right.”

The authors point to studies that show how money gives people:

  • more control of their lives
  • more free time to spend with loved ones
  • longer, healthier lives
  • a buffer against stress and harm

These are all elements that have been identified in studies as sources of happiness. So, if rich people are able to afford top medical care, a summer in the south of France with their family, and seeking out a meaningful career — elements of a happy life — why aren't they proportionately happier than those who have less money?

Humans don't know what will make them happy

The main reason is that people don't know how to spend their money to cultivate happiness. “Money is an opportunity for happiness,” Dunn and her colleagues write, “but it is an opportunity that people routinely squander because the things they think will make them happy often don't.”

Whenever we're presented with a choice, it's human nature to try to predict the future outcome of each option. But the researchers found quite a few studies that show that humans are horrible at making accurate predictions.

  • For one thing, we underestimate how easy it is for us to adapt to our circumstances — good or bad — and our predicted scenarios lack important details.
  • Second, the context in which we make our predictions is not the context in which we will have the future experience.

These two factors mean we are awful at predicting what will make us happy, how happy it will make us, and how long it will make us happy.

Related >> The high cost of keeping up with the Joneses

How to spend your way to happiness

An individual might be unable to forecast what will make her happiest, but luckily empirical data can make up for human error. The researchers found eight key ways that spending can increase happiness. We'll cover the first three today (and the last five next week).

Tip #1: Buy fewer material goods but more experiences.

Experiences keep us in the here-and-now, and often only get better with age. When you buy a material good, however, you adapt to it more quickly and witness your purchase becoming worn and less “shiny” over time. We anticipate and remember experiences more than things — you probably fondly recall the Thai cooking class you took with your spouse on your second date, but never give much thought to the living room furniture you bought last year.

Also, it's more difficult to obsess about the option you didn't take with experiences, and ruminating over roads not traveled is a fast path to unhappiness. For example, you're deciding between two car models, you make your purchase, and then you see an article in Consumer Reports showing the other model to be far superior. Ouch. Suddenly you're a lot less happy with your shiny new toy. But if you're deciding between a wine tasting trip in Tuscany or climbing Machu Picchu in Peru, can you really go wrong? It's much more difficult to compare two wholly different, but probably equally amazing, experiences. It's unlikely you'll regret either option.

I've always liked the idea of spending on experiences, but I never thought about how it can curb buyer's remorse, which can be a huge source of unhappiness for me. I'm a planner and a researcher by nature, which means I am usually trying to buy the best item at the best price. I hate finding out that the Blu-Ray player we finally settled on (after two years of limping our DVD/VHS player along) doesn't do everything advertised. But with experiences, I'm spared that. My birthday is next week, and I'm deciding between the new farmhouse-inspired, Japanese fusion restaurant and the sophisticated-yet-casual locavore cafe with a European flair. I don't think I can compare or go wrong — the experiences would just be different.

Related >> Ultimate Guide to Mastering Your Money in College

Finally, the researchers point out that experiences are usually shared with others, and other people are one of our greatest sources of happiness.

Tip #2: Use money to help others.

I loved this tidbit from the paper: Only termites, eusocial insects, and naked mole rats create social networks as complex as the ones humans construct, and we are the only known species to include unrelated individuals in our networks. In other words, even the most introverted among us are still highly social creatures in comparison with every other species on the planet.

One study showed that, even after controlling for income, people who spent more money on prosocial spending (gifts for others and donations to charity) were happier than those who spent less. Personal spending (bills, expenses, and gifts oneself) was shown to be unrelated to happiness. Another study showed how the rewards of prosocial spending are detectable at the neural level — activating brain areas typically associated with receiving rewards.

The authors write:

Although the benefits of prosocial spending are robust across cultures and methodologies, they are invisible to many people. Surveying UBC students…a significant majority made an affective forecasting error: they thought that spending money on themselves would make them happier than spending on others. Indeed, simply thinking about money has been shown to undermine prosocial impulses, making people less likely to donate to charity or help acquaintances. Although money can and should promote happiness, the mere thought of money may undermine its ability to do so.

This is one area where we seem to make inaccurate predictions about spending and happiness.

Tip #3: Buy fewer expensive pleasures and favor of more frequent, less expensive ones.

Because of our ability to adapt so quickly to change and new things, there's evidence that indulging in more frequent and less expensive pleasures will make us happier than less-frequent, luxury goods.

Small pleasures are usually a different experience every time. Things like a massage, a drink with your friends, or tickets to a local performance are never exactly the same, and therefore it takes more time for us to adapt to them. If you decided to forgo those pleasures to afford a brand-new set of living room furniture, you might find your self adapting to the furniture and the newness and excitement wearing off faster than you thought it would. You sit on it every day, it's the same experience every time — and is that a juice stain on the cushion?!

Another study showed that “breaking up” a pleasurable experience, rather than receiving it all at once, increases happiness. In one study, one group of participants was given a long, continuous massage, and another group was given two shorter massages with a break in between. Before the massage, the majority of participants predicted that they would rather have one continuous massage (I know I would!). Turns out that those who had the shorter massages with the break found the experience was more pleasurable and they'd be willing to pay more (Oh. I guess I wouldn't.)

I think this is why telling folks to give up their lattes is great advice on paper, but ineffective in real life. For example, I love coffee. Love. I make it at home now that I work at home, but when I had a 9-to-5 gig, when I had to face days of traffic and meetings and office politics and is-it-Friday-yet, my overpriced latte from the coffee shop was one of the highlights of my day. Really. I was Norm and this was my Cheers — everybody knew my name; everybody knew my drink. Having that warm, frothy beverage in my hand made clocking in at the cube farm a little more bearable.

Why is shorter and more frequent better? The researchers found that these little pleasures, like our morning cup of java, allow us to enjoy more first moments, which are tied to our perceptions of happiness. It's like having ten first bites of cake, as opposed to eating the entire cake in one sitting.

Tip #4: Don't buy extended warranties.

“If the bad news is that we adapt to good things, the good news is that we adapt to bad things as well,” write the researchers. Studies on how people deal with trauma have shown that people are less fragile than they think when faced with tragedy, and they overestimate how negatively it will affect them.

One result is that we are more vulnerable to purchasing insurance we don't need, such as extended warranties, which are usually overpriced and provide more benefits to the seller than the buyer. Last year, for example, I bought a mouse for my laptop that would relieve my wrist pain. The item was about $30. The insurance I was offered was $8. I've had this mouse for almost a year, and I've dropped it on a hard surface and the ball has popped out and rolled across the room (to the great amusement of my cat) many times. But it still works just fine.

Essentially, they write, extended warranties are “unnecessary emotional protection.” Why? Our psyches are great at rewriting history to avoid self-blame and regret. Sounds like a negative, but the upshot is that we experience less regret than we predict. We have a built-in “unhappiness-reducing mechanism.”

What's more, unnecessary insurance not only doesn't increase our happiness, but it can actually reduce it. In one study, participants were offered a choice of prints of paintings. After making their selection, half were offered a generous exchange policy ― they could swap their print for another at anytime in the next month. The other half were told their choice would be final. Participants predicted they would be equally happy with their choice, with or without the exchange policy, but in reality the ones who didn't have the exchange option experienced an increased appreciation of their print. The other group liked their selection no more and no less than before.

We buy extended warranties and return policies in an attempt to shield ourselves from buyer's remorse, but research shows they don't add to our contentment, and might actually detract from it.

Tip #5: Delay consumption.

Our culture likes to buy now. Credit cards allow us to purchase today with tomorrow's income. We constantly hear “no money down” and “no payments for a year” offers on TV. Thanks to the Internet, we can make digital purchases instantly.

The researchers found two key ways these changes have reduced our happiness. First, it can lead to shortsighted spending behaviors that often result in financial ruin. I have a friend who spent his way into bankruptcy. In his case, it wasn't medical bills or some other catastrophic event that wiped him out — it was a luxury car on lease, the newest iPhone, and the biggest LED screen TV on the market that sunk him. The paper cites several studies that show that when people are impatient, they wind up less happy in the end.

Second, buying now and paying later means there's no anticipation, and it turns out that anticipation is a source of happiness. Sometimes anticipation is an even bigger source of happiness than the even itself. One study showed that people who devote time to anticipating enjoyable experiences describe themselves as happier than those who don't, and another showed that thinking about future events evokes stronger emotion than thinking about those same events in retrospect.

In addition to anticipation, delaying a purchase also can change what choice you make. Participants in one study were asked to select a snack — an apple, banana, paprika-flavored crisps, or Snickers bar. When asked to pick one to eat immediately, the overwhelming majority chose something unhealthy. When asked to pick one to eat next week, they chose a healthier option.

Our immediate wants are swayed more heavily by emotion, which is why the 30-day spending rule can be so effective against impulse buys.

Tip #6: Consider how peripheral features of Stuff may affect your everyday life.

I sometimes daydream about owning a small house in Mérida, Yucatán. It's a beautiful city with a rich history, and close to Mayan ruins and gorgeous beaches. But there's more to owning a getaway in Mexico than sunny beaches and Yucatecan cuisine — navigating property ownership in a foreign country, arranging for someone to look after the place in our absence, dealing with repairs and upkeep upon arriving for our “vacation,” and more.

One study showed that the farther away an experience is in terms of time, the more abstractly people think of it. It sounds romantic when daydreaming about it 20 years down the line, so we overlook important details that will affect our happiness.

In addition, there's evidence that the daily ups and downs have a far greater effect on happiness than a single purchase — and we overestimate the effect of the event on which we're focusing (with those rose-colored glasses). Buying the house in Mexico probably won't have a lasting effect on my overall happiness because, like anything, there will be positives and negatives. There will be headaches and hassles, as well as the joys of belonging to the local community. In the end, I think I'd rather just rent a place if we're going to stay for an extended period.

Tip #7: Beware comparison shopping.

Comparison shopping is a smart practice that saves you money, but sometimes it distracts us from the attributes that are most important to us. Instead, we focus on attributes that distinguish one option from another.

Someone in the market for a new home, for example, might want something affordable with a big yard for the kids and an open kitchen. But after viewing 20 homes, some of which are probably outside of their stated maximum purchase price, suddenly the homes that fit their original needs aren't as exciting. They might forget how important a large yard is after being dazzled by an amazing view. Maybe they'll take out a bigger loan to afford something that wasn't important to them when they started out.

When comparison shopping for a new camera, I experienced this problem. Suddenly features that I didn't care about initially became more important because they distinguished one model or brand from another. (Next time I might make a list of what matters to me — actually write it down — and compare models based only on those attributes. Could be an interesting experiment.)

Tip #8: Pay attention to the happiness of other people.

We like to think we're unique, but studies have shown that the best way to predict what we will like is by seeing what other people liked. From the paper:

…Gilbert, Killingsworth, Eyre, and Wilson (2009) asked women to predict how much they would enjoy a speed date with a particular man. Some of the women were shown the man's photograph and autobiography, while others were shown only a rating of how much a previous women had enjoyed a speed date with the same man a few minutes earlier. Although the vast majority of the participants expected that those who were shown the photograph and autobiography would make more accurate predictions than those who were shown the rating, precisely the opposite was the case. Indeed, relative to seeing the photograph and autobiography, seeing the rating reduced inaccuracy by about 50%.

In other words, if you are a female and the majority of women in your age group rated a movie favorably, chances are good that you'll enjoy it, too. It's worthwhile to check out user ratings and reviews before making a purchase.

Money can buy most of what makes us happy

“Money can buy many, if not most, if not all of the things that make people happy, and if it doesn't, then the fault is ours,” write the researchers. We are bad at predicting what will make us happy, and often spend in ways that not only don't increase happiness, but actually decrease it.

Personally, I think the studies about comparison shopping might alter how I seek out the best deal. I very much identify with the distracted feeling the researchers describe, and I have experienced situations where I can't even remember which attributes mattered most to me. Sometimes I give the whole thing up and don't buy anything (not necessarily a bad outcome). How might you change the way you buy based on these principles? Have you made a purchasing choice that actually decreased your feelings of overall happiness?

More about...Psychology

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LifeAndMyFinances
LifeAndMyFinances
9 years ago

Great points April. I’ve always wondered this myself – if money doesn’t make one happy, but love and relationships do, then why not just use the money to spend more time with your loved ones?

It seems fairly obvious, but I suppose it’s in the human nature to acquire “stuff”, and lots of it. The more we have, the cooler we look, but the emptier we feel.

Good message – use your money to increase the quality of your relationships, and you’ll be happier for it.

ArandomPerson
ArandomPerson
9 years ago

Tip #3: I do this with booze. I rarely drink now (after losing a silly amount of weight 150lbs, part of it due to stopping the drinking), but when I do I have a dusty collection of old, very good, rums. So I have a glass every month or so…and it is wonderful. I enjoy it so much more then having a drink or two every night. #2 After every Xmas I throw a party for my friends. They are not supposed to bring presents or anything besides themselves. I make sure everyone has a gift or three, that there… Read more »

DreamChaser57
DreamChaser57
9 years ago
Reply to  ArandomPerson

Congrats on the weight loss – impressive. Your party sounds fabulous! I’m not that fond of potluck dinner except with very close family – it’s hard to have a uniform presentation, all the food might not be there at once, people leave and want their dishes etc. etc.

DreamChaser57
DreamChaser57
9 years ago

Buy less ‘Stuff’ and more ‘Experiences’ is becoming conventional Personal Finance wisdom -the inherent problem with conventional wisdom is that it is often mindlessly parroted and researchers might have a pre-disposition to certain outcomes in studies. Stuff and Experiences are not always polar opposites on the happiness meter. Someone with a large yard might purchase an expensive riding lawnmower and recapture several hours to spend with family instead of toiling in the yard. A big screen television or basement renovation might encourage more family interaction and teens might be more willing to bring their friends by to entertain instead of… Read more »

Kathryn
Kathryn
9 years ago
Reply to  DreamChaser57

No debt is definitely the best debt, but as someone who amassed 20k in student loans to get a great job starting at 60k salary, sometimes you just have to make the investment. No longer is it possible to work your way through college on a part time job. I worked at the school and on all breaks, but without the student loan options, I could not have finished in less than 6-7 years (as is, I did it in 3.5). So while student loans are absolutely not ‘good’ debt, they aren’t as bad as some investments. With the job… Read more »

Andy
Andy
9 years ago
Reply to  Kathryn

Kathryn,
I think using student loans intelligently is the key. Borrowing 20k to get a job that pays 60k can be smart, but more and more I think you have students borrowing 60k to get a job that pays 30k a year. This is not good debt.

cc
cc
9 years ago
Reply to  DreamChaser57

thank you!
for years i have been without a living room couch. we are saving up for one and a couple months away from getting one. I AM PSYCHED.
experiences are great and all, but sometimes you just want a nice couch.

DreamChaser57
DreamChaser57
9 years ago
Reply to  cc

Aaaaaaaaaaggggggggghhhhhhhh, the wonder and joys of a new couch, we just replaced our living room furniture and it’s like a dream, comfy and cozy. The old couch had a back-busting sink in the middle, was stained, and the fabric absorbed smells. *YUCK* Our new furniture is the gift that keeps on giving.

El Nerdo
El Nerdo
9 years ago
Reply to  cc

YES.

MaloMonster
MaloMonster
9 years ago
Reply to  cc

Ah, couch! I used my childhood savings account to buy a new couch, “chair and a half”, and ottoman. It was a wonderful experience, because I used many of the PF Lessons I learned on GRS when buying it! 1. I found the couch I wanted, then waited a month before considering REALLY buying it. 2. I went in with cash (this gave me an additional 5% off the already discounted price) 3. I negotiated with the sales rep. I told him I was ready to buy, I knew what I wanted, and I wanted him to make a sale.… Read more »

I.G.
I.G.
9 years ago
Reply to  DreamChaser57

+1 to a certain extent of interchangeability between stuff and experiences: I like having beautiful things and plants in my apartment because I can look at them and feel their beauty every single day, and that is an experience.

Of course, all of this needs to be individually adapted. To me, April’s article is also a testament to using stuff you love every day, instead of saving it for a special occasion (eg. favourite plate sets or dresses).

Lily (capital L)
Lily (capital L)
9 years ago
Reply to  I.G.

Very true. It’s often implied that buying stuff is a sin or an offense to true life values, but this is the case only if you buy just for the sake of buying or to keep up with the joneses. It’s not true that one gets fed up with its purchases either… I like to wear some clothes I bought years ago even if they’re not trendy any more. I immediately loved them and “had to” buy them and they became my favorite. Impulse buys have an undeserved bad rep either, ’cause they can be your best 😉

Mary H
Mary H
9 years ago
Reply to  DreamChaser57

I agree heartily that Stuff and Experiences are not necessarily opposites. They can be quite effectively combined to bring extra value to both options. I have had some memorable experiences buying things I love (my couch!) with someone I care about. I’m not much of a shopper but shopping for something for our house with my SO, or spending time with a my daughter or a friend while looking for like a specific pair of shoes can make that item special because of the experience attached.

Karen
Karen
9 years ago
Reply to  Mary H

I’m glad to see others chiming in on the Stuff/Experiences dichotomy … I love travel as much as anyone, but I’ve gotten just as much enjoyment out of my carefully chosen living room furniture (which I’ve had for five years, and which still looks great) as I did the trip to Colombia I took last summer. Very different kinds of happiness, but I wouldn’t prioritize one over the other. My personal mantra when it comes to Stuff is “fewer, better things.”

Meredith M
Meredith M
9 years ago

Thanks for bringing this research to my attention, April. Here’s another way that experiences prevent buyer’s remorse: whether you liked it or not, once the experience is over, it’s really over. For instance, my husband and I went to see Spamalot last week, thinking we would like it, but we hated it. I did kind of wish I had the price of the tickets back, but I thought about how I would feel if we had bought an object that we ended up hating for the same price. Not only would we have spent the money, we would now have… Read more »

cerb
cerb
9 years ago
Reply to  Meredith M

I don’t know, there have been a few times I’ve done something, like gone to a movie, that wasn’t just a waste of money, it was a waste of my time. I wanted to get those 2 hours of my life back.

Objects, on the other hand, can be sold (as you mentioned), or given away, and maybe they can bring pleasure to someone else. They’re redeemable, but time never is.

Des
Des
9 years ago
Reply to  Meredith M

Yeah, I’m with cerb on this one. DH and I went on a cruise a couple years ago and it was just AWFUL! I cringe every time I think about it. I wish we hadn’t gone, not just for the money, but I wish I could make the memories go away! I think this is an area that requires some self-awareness. Just because some blogger says you’ll like something doesn’t make it true. DH and I are just NOT cruise people. We would have been better off burning that money.

Tracey H
Tracey H
9 years ago
Reply to  Des

Me, too! We love to travel. We’ve travelled on the cheap and in luxury. But we (especially me) hated our cruise (and were quite surprised to discover that). I wish I had my money back (it’s not that anything went wrong, it’s just that it’s totally not our style of travelling).

Anne
Anne
9 years ago
Reply to  Des

I see what you mean. If I buy a sweater or nicknack I don’t like, I can get rid of it. But I can’t get bad experience memories to go away! So maybe it’s true on both sides. Good experiences are more valuable and bad experiences linger more painfully. The research (I guess) doesn’t account for whether you enjoyed the experience or not. I went on a weekend away a few years ago and HATED it. I still have nightmares that I’m stuck there for the weekend. It didn’t make a funny or entertaining story. I just simply sucked. I… Read more »

Nicole
Nicole
9 years ago

Very neat article. Thanks!

Kathryn
Kathryn
9 years ago

So, here’s an interesting question. Are video games objects or experiences? How about socially interactive games, like World of Warcraft?

J.D. Roth
J.D. Roth
9 years ago
Reply to  Kathryn

Well, as I’m sure Tyler K will be along to note (and, in fact, DreamCatcher57 already has), sometimes there’s not much of a difference between things and experiences. Your example is a good one. (Although games like World of Warcraft have other drawbacks that lead to unhappiness — but that’s a subject for a different article on a different website.) I think the research into Stuff vs. Experiences is interesting, and my own life seems to support it, but I also think it’s important not to take it as an absolute. There are certainly times that buying things can bring… Read more »

Nicole
Nicole
9 years ago
Reply to  J.D. Roth

Like I’ve said before on many of these discussions… probably it means that people in general have too much stuff and not enough experiences, so the marginal utility of an additional experience is greater than that of an additional unit of stuff. Those of us who travel a lot don’t feel the need to travel anymore because we’ve long since hit diminishing marginal returns to happiness on travel.

I should write a post on that so I can just link to it the next time this comes up.

DreamChaser57
DreamChaser57
9 years ago
Reply to  J.D. Roth

JD – who is DreamCatcher!?! I’m DreamChaser. *hmphf*

Milly
Milly
9 years ago
Reply to  DreamChaser57

Don’t you want to catch a few as well? 🙂

J.D. Roth
J.D. Roth
9 years ago
Reply to  DreamChaser57

And I’m groggy at 6:06am. 🙂

DreamChaser57
DreamChaser57
9 years ago
Reply to  DreamChaser57

Milly – that is a great point, the whole point in chasing the dreams is to “catch” them, LOL…..

Adam P
Adam P
9 years ago
Reply to  J.D. Roth

MMO-RPGs are a very cost effective dollar/hour entertainment source, but as JD says, I am not sure they are worth it if you have an addictive personality. People can and do lose their relationships/marriages/jobs from these games and even if they don’t lose them they cause damage to them. I have seen firsthand what a “WoW” addiction has cost in some of my friends lives (more than one marriage). Those games are akin to crack for some people (not all, I’m sure some relationships are stronger because of the games too).

Kathryn
Kathryn
9 years ago
Reply to  Adam P

Absolutely. The SO and I actually play together. We quit awhile back feeling tired of it, but came back after we realized we missed the time playing together. Plus, it’s really hard to beat the feeling when you and 24 other awesome people finally topple the raid boss.

Tyler Karaszewski
Tyler Karaszewski
9 years ago
Reply to  Adam P

It’s easy to beat that feeling. It’s the feeling of winning, and it’s stronger if you beat people that are really trying and competing than it is when you beat a computer that was designed to be beatable. Just playing a PvP game gets you the same feeling, and it’s even better when your teammates and opponents are actually physically present, like say, for a game of basketball. Also, basketball has no monthly charges and is physically good for you.

Laura in Cancun
Laura in Cancun
9 years ago
Reply to  J.D. Roth

I think it depends on how the person handles it. In my experience, some of my best bonding moments have been with videogames.

My dad and I have always been obsessed with Tomb Raider. He was good at shooting, and I was good at puzzles, so we’d spend hours getting through the game together.

My sister and I got the game The Neverhood for Christmas one year. We spent weeks playing together and laughing ourselves silly. (Best. Game. Ever.)

Sheri
Sheri
9 years ago

Yay for The Neverhood! LOL, just had to chime in here.

Andrea
Andrea
9 years ago
Reply to  Kathryn

I think that can go for a lot of things. When I think of a new cozy couch I think of the experience of watching a movie with my fiance on it. Or a new pair of shoes that would be perfect for girls night out with friends. I think we relate physical objects with experiences a lot which may be why they don’t always live up to our expectations.

Easter
Easter
9 years ago

I enjoyed this article very much, but I have to agree with DreamChaser57. I dislike the idea that experiences are inherently better than “stuff.” My husband and I recently spent quite a bit of money on living room furniture – yes, just like your “stuff is bad” example. We bought new living room furniture and a new television and had recessed lighting and a ceiling fan installed in the room. We are thrilled with every penny we spent! The living room used to be a dark, uncomfortable room that the family barely used. Now, it’s everyone’s favorite room. Our next… Read more »

MutantSuperModel
MutantSuperModel
9 years ago
Reply to  Easter

Funny enough, the point the article is making is one you’re not in a position to negate: the value of stuff over time. You said it yourself, “My husband and I recently spent quite a bit of money on living room furniture.” It has not stood the test of time yet. What the researchers have found is that most likely in twenty years you’re not going to be talking about the amazing furniture, but you’ll still be talking about your amazing honeymoon.

BIGSeth
BIGSeth
9 years ago

Yeah, well, you have to sit on something during those 20 years. And you might remember sitting on something uncomfortable for 2 decades – how’s that for an experience?

Another Kate
Another Kate
9 years ago

Here’s an interesting coincidence: The latest post on the Happiness Project blog is “Nine Tips to Quit Nagging.” Tip number 8 is to think about how money might be able to buy you happiness — in the form of services, such as prepared food or help mowing the lawn, which can reduce conflicts in a relationship. I know J.D. has addressed spending money to reduce chore conflicts as well.

Chett
Chett
9 years ago

Great review of the article April. One of your best contributions to GRS I think.

Ryan
Ryan
9 years ago
Reply to  Chett

I agree with Chet on this one. One of your best yet.

Squirrel Saver
Squirrel Saver
9 years ago

Bad experiences often make the greatest stories.

Kevin M
Kevin M
9 years ago
Reply to  Squirrel Saver

Good point!

Alma
Alma
9 years ago

I think it also has to do with the “law of diminishing returns.” The stress reduction/happiness increase of going from no income to enough to live comfortably is probably not as great as the jump between living comfortably and being able to buy a ferarri or a yearly trip to Europe.

Adam P
Adam P
9 years ago

Really love this article, April and JD. More like it for sure. I sometimes wonder what to do now as I’ve long passed the initial stages of personal finance (paying off student debt and staying out of cc debt, built the emergency fund, started investing spare funds, etc.); what’s the best way to spend the “spare” money I have each month after meeting my savings goals? A trip to a safari in South Africa? Big charitable donations? Spa weekend? An original Larry Elmore painting? New gaming computer? Help out my friend who has run out of unemployment is about to… Read more »

Jen
Jen
9 years ago

Interesting — the people who are noting “stuff” that made them happy are phrasing it in experience terms: “room used to be a dark, uncomfortable room that the family barely used. Now, it’s everyone’s favorite room.” <– the experience is now pleasant. “I’ve been wearing them for nearly a year, and they make me look forward to getting dressed every day.” <– day begins with happy experience/feeling (I have some pjs like that.) Maybe that's a good rule of thumb for stuff acquisition — is this likely to provide a series of small but happy experiences or is it likely… Read more »

Sara
Sara
9 years ago
Reply to  Jen

I think this is exactly right. If we get our greatest happiness from social interaction, then it doesn’t matter if that interaction is facilitated by “experiences” or “stuff.”

If I buy new living room furniture that leads to me spending more time with my family, or if I buy my family an expensive vacation that leads to spending more time with my family – doesn’t matter whether it’s “experience” or “stuff” – I’m still spending more time with my family and that’s making me happier.

Easter
Easter
9 years ago
Reply to  Sara

That’s exactly the point I was trying to make, Sara! Thanks for phrasing it so well.

KAD
KAD
9 years ago

Thanks for the link, April. To me the most amazing part of the whole report is this passage on page 19: “In 1949, a businessman named Frank McNamara found himself without any cash after dining at a New York City restaurant. The mortification he experienced as his wife paid the bill provided the impetus for him to create one of the earliest credit cards, establishing the foundation for today’s multi-billion dollar credit card industry (Gerson & Woolsey, 2009).” So, basically, our entire credit card industry came about because of gendered assumptions. He was humiliated because his *wife* had to pay… Read more »

El Nerdo
El Nerdo
9 years ago
Reply to  KAD

Wow, great video, thanks for that link.

Ruth
Ruth
9 years ago

Stuff and Experiences are pretty equal to me…the key to greater satisfaction (or happiness) is the anticipation. So whether it’s waiting a year to buy the perfect couch…or waiting a year to go on vacation…knowing how long and how hard you’ve worked to get at it, makes it that much more satisfying when you see/use it or when you remember it…but what would I know…that’s just my 2cents.

Kevin M
Kevin M
9 years ago

I have a theory about tip #1 – the quality of Stuff that most people buy is so utterly terrible they have no other choice but to be disappointed by it. Perhaps if we spent a little more on things that were well made and that we truly value, instead of sprinkling dollars around everywhere, happiness (or at least satisfaction) in this regard would increase.

Really enjoyed this article, nice job. And I get where you are coming from re: the coffee.

Laura in Cancun
Laura in Cancun
9 years ago

Love love love this post! I have a good example about experiences being better than purchasing for yourself… My husband used his birthday money to buy clothes. I’m using my birthday money to go to Xel-Ha this weekend (an All Inclusive nature park with snorkeling!) Which one sounds better? We’ve both been looking forward to Xel-Ha for months now 🙂 As for the latte factor, my coworker and I go to Starbucks every day. I used to spend too much there, until I realized I didn’t care about the coffee! I just liked sitting outside and chatting with my friend.… Read more »

Frugal Mama
Frugal Mama
9 years ago

Very interesting post. I’m looking forward to the next installment. I used to think that money couldn’t buy happiness, but then we got a cleaning lady. 🙂 No but seriously, I’ve been thinking about these same issues as we have just chosen to relocate to one of the most expensive cities in the U.S. I wrote about it today here: http://parentables.howstuffworks.com/dollars-sense/should-housing-costs-affect-our-decision-where-live.html I seriously hope we are not inaccurate in our ability to predict our happiness, because we could have saved a TON, and I mean a ton, of money if we had chosen a different city. Interesting how people underestimate… Read more »

El Nerdo
El Nerdo
9 years ago

I wanted to comment on the article, but I have to offer a fact check first. As someone who’s been there, you don’t “climb” Macchu Picchu– you just “go” there. While Macchu Picchu is built on a ridge, getting there is not really a “climb”. You can hike to Macchu Picchu, which takes 2 or 3 days on the Inca Trail (things have changed since I did this, you might have to hire a guide these days, which might alter the timetable), but when you do this you arrive from above the ruins– so you “descend” on Macchu Picchu. There… Read more »

Carolyn
Carolyn
9 years ago

I often feel like we have too much stuff (certainly we don’t have room for it all), but then my husband points out that much of the “stuff” we have is to facilitate experiences. We have sleds, skis, a sailboat, bikes, horseback riding supplies, martial arts equipment, and all the stuff that goes along with those items. But, what do we do with that stuff? Owning our own skis makes it easier and cheaper to take the family skiing, we bike on the trail near our house, the sailboat puts us on the water as a family to enjoy getting… Read more »

Tanya
Tanya
9 years ago

That information about breaking up experiences is great. We are all so “now, now, now” oriented and tend to want everything right now (a la Veruca Salt). What a great reminder to savor, enjoy, anticipate the pleasures in our lives.

Money Reasons
Money Reasons
9 years ago

I think if we follow much of the mainstream financial advice, we would all be miser sitting at a computer screen continually crunching number on the amoutn that they’ve saved and projecting how much they’ll have when they are 65, 70 and on up.

I use to be of such an mentality, but now I strive for a more balanced but still responsible approach!

Thanks for schooling me with “Tip #2”! I wouldn’t have guessed that “naked mole rat” were social (but they sounds like wild partiers to me, lol).

Great writeup on the money and happiness myth.

Woodstock
Woodstock
9 years ago

This book seems entirely relevant to this discussion, and is also a great read on the topic, above and beyond “just” money:

http://books.google.com/books?id=2U-HbwwjR24C&lpg=PP1&dq=stumbling%20on%20happiness&pg=PP1#v=onepage&q&f=false

Ely
Ely
9 years ago

This is a great article and a fantastic discussion. It is interesting to note the stuff/experience dichotomy is not black and white. We were in Scotland recently and my husband had to buy shoes – the ones he had brought sprung a leak. I was annoyed to spend precious travel hours in the mall, but he loves those shoes, and he thinks of the trip every time he puts them on. Worth it, I think. If experiences make us happy, and stuff can help make those experiences possible, then the real choice to make is buying stuff that creates experience,… Read more »

Blocke
Blocke
9 years ago

Better advise would be to stop thinking of your stuff as stuff and start thinking about it as experience. That car you bought may not be the best consumer reports model, but it beats the experience of being trapped at home or working a job you hate because it’s close.

Steve M
Steve M
9 years ago

Totally agree – it’s all about experiences over things. Took me 43 years to learn that lesson!

Happiness is always an inside job though – it always starts with how we feel about ourselves. Material things and even experiences, to some degree, can provide momentary happiness – but it never lasts – lasting happiness is found in accepting what is, being grateful for what you have, and giving to others.

April
April
9 years ago

Just to note, the stuff vs. experiences conclusions are what these researchers found to be true. I agree, for the most part, that experiences bring me more pleasure than Stuff. That doesn’t mean it’s an absolute, of course. My new teapot, for example, makes me really happy, but I didn’t have one, and I’m getting the experience of a much better cup of tea than I used to make. I have camping equipment, which is Stuff, but it allows me the experience of living in the great outdoors for a week. Some Stuff definitely blurs the line. I think it’s… Read more »

Mike Learner
Mike Learner
9 years ago

It all relates to self esteem and confidence. I was always a forward thinker and I think long term most of the time. When you switch your mentality you can release some stress which cause happiness

Adam P
Adam P
9 years ago

Where do people put home ownership on the happiness scale?

I’m saving for a downpayment currently (the biggest and most expensive thing on my budget, eclipsing my rent annually), because I’m wanting to buy my dreamhome (a small 3bedroom 2 bath townhouse within a halfhour’s walk to work in Toronto–aka a fortune).

Is this going to be a purchase that will cotinually bring me happiness or will it dull over time? Am I better off investing for retirement with the downpayment money (already saving 20.5% gross for that) so I can travel more in the future?

Mike Holman
Mike Holman
9 years ago
Reply to  Adam P

The novelty of everything wears off over time.

I think your house happiness will be at least partially related to the affordability. Ie if you are house poor – there’s a good chance you’ll not enjoy the house as much as if you can afford it.

MutantSuperModel
MutantSuperModel
9 years ago

I’m amused at the Stuff champions all referring to “new” items or things acquired “recently”. This doesn’t counter the research’s point on Experience vs. Stuff at all.
Where’s the reader who bought an item 15 years ago and still cherishes it immensely and uses it often? It’s much rarer for many reasons I’m sure not the least of which being stuff deteriorates and does lose value (emotional and monetary) over time. I don’t think anyone’s proven the opposite in the discussion as of yet.

Marsha
Marsha
9 years ago

Stuff I’ve had a long time that still makes me very happy–
1. The house we bought 15 years ago
2. The piano my parents bought for me nearly 40 years ago (but this is an experience, too)
3. Jewelry my husband has bought me over the years (married almost 29 years)
4. My 5-year-old graphing calculator (I’m a math nerd)
5. Many small appliances that make cooking easier–crockpot, KitchenAid mixer, food processor, bread machine, etc.

I can think of lots more, but I’ll end here.

Cathy
Cathy
9 years ago

The researchers found that experiences have a better ROI but everyone needs a certain amount of Stuff to be happy. Just because experiences give you a little more happiness doesn’t mean you should always choose experiences over stuff and that stuff is always bad.

Lots of people have Stuff that has great sentimental value that they have had for years.

MutantSuperModel
MutantSuperModel
9 years ago
Reply to  Cathy

I’ve never implied to always choose Experiences over stuff but it does seem, even with examples, experiences generally prevail and it’s not necessarily because of the experience being better it’s because of the tricks our brains play.

Easter
Easter
9 years ago

I used the living room furniture as an example because it mirrored an example given in the article. Certainly there are other items I can think of that qualify – books I’ve treasured for decades, my favorite old recliner, even our 8-year-old printer that has certain scan features I love. I don’t think the exhaustive list is necessary to make the point that the stuff/experience dichotomy is a false one.

Tyler Karaszewski
Tyler Karaszewski
9 years ago

All of these findings are predicated on being able to measure happiness. How are they doing this in the study? I’m sure it says, but it’s also 50 pages long, so it’d take some time for me to find it. If it’s just asking people after the fact “how happy do you feel?” I’m not sure how much weight that carries. Maybe the study would explain if they think it carries any weight (they must if they’re publishing the results). And, like J.D. said I’d say — experiences and things are partly interchangeable. You buy things to experience them, wether… Read more »

Nicole
Nicole
9 years ago

A paid-for 1.4 million dollar home on which the taxes can’t rapidly increase, too, thanks to Prop 13. Of course, without Prop 13, his school probably wouldn’t have to be asking for donations (and the house probably wouldn’t be worth quite so much)…

KarenJ
KarenJ
9 years ago

This year, we decided to take “mini” vacations by planning several long weekends away that are within driving distance to keep down costs. We went to NYC in March, are going to Atlantic City in June, and to the Pocono Mountains in PA in July. I find that I am happy when I think about and look forward to these weekends. Sometimes a couple of days away is all it takes to reconnect with your spouse and recharge your batteries. Going away is what makes us happiest, so this is how we spend our discretionary income. @Frugal Mama I would… Read more »

Adam P
Adam P
9 years ago
Reply to  KarenJ

I’m with you on the cleaning lady. I can keep my place tidy with no clutter but to properly clean I need to call in Jenny the Maid, if I do it myself, it’d be like me trying to do the work of a brain surgeon or a computer engineer. I need a professional. She comes once a month and does the dirty work (pun) for $60. And I don’t think I’ll ever ‘adapt’ to walking into my spotless house and trying to keep it clean for a week or more after she is done.

Andrew
Andrew
9 years ago
Reply to  Adam P

I agree. Worth every penny. It’s not mentioned often enough that money can buy the freedom FROM an experience (i.e. cleaning the house) that is disagreeable/difficult/boring etc.

partgypsy
partgypsy
9 years ago

Yeah I don’t know, I bought a new mattress last year and I’m enjoying it 8 hours every day. I do agree find out how to maximize your money’s worth of happiness is the important thing, as long as you are not impacting your basic financial security to do so. There was a period of time where every year I set aside money to buy a nice piece of jewelry. It seems like that would score low on the happiness quotient because you are buying only 1 thing, but I enjoying looking forward to saving up for the purchase and… Read more »

Cindy
Cindy
9 years ago

This post really spoke to me. I have been sending all my extra dollars to a credit card that I want paid off by the end of summer. Because of this, and the fact that I am so close to paying it off, I have been feeling deprived is several areas. But I just receive $100 from my parents for a birthday gift & have been struggling as to whether to put it towards the cc or spurlge on a massage. After reading this post I am going to get a massage & send send any leftover money to the… Read more »

Kris
Kris
9 years ago

I tend not to value the sorts of experiences a lot of people enjoy–I don’t enjoy traveling but I do it anyway, and while the memories are useful they’re not *pleasant*. I barely remember most things that fall into the category of “experiences not stuff” — I went to the symphony a couple of times a few years ago, and while I recall enjoying myself I couldn’t tell you a thing about the music. The best experiences for me are always photography-related ones, because the pictures are a tangible reminder of it that I can have the pleasant experience of… Read more »

Roberta
Roberta
9 years ago

This is one of my favorite all time GRS articles! I just linked to it from my fledgling blog. The comments are great, too. Thanks April and JD.

Susan
Susan
9 years ago

I agree 100%. I am the same in terms of thinking that experiences are better than ‘stuff’. Would I love to paint & redecorate my condo? Sure, but I’d much rather spend some of the money to go see a friend in Paris. (Which is exactly what I did last fall!)

retirebyforty
retirebyforty
9 years ago

Lately, I’ve been thinking that spending a lot of money on “experience” is another bunch of sales BS. Sure, I like taking a beach vacation as much as anyone, but do I need to take 2 international trips a year? Probably not. I think it’s better to figure out what is really important to you and spend money on that. If a kitchen remodel is really important to you, then skip the vacation this year.

Hannah
Hannah
9 years ago

My brother always tells me tangible stuff makes him happy, while I love experiences and trips. So it’s different for every individual.

One thing for sure, DEBT IS NOT HAPPINESS!

Cathy
Cathy
9 years ago

The problem with the “stuff is bad and experiences are good” argument is that it’s really about finding the best “stuff to experiences” balance for you. Most Americans are probably out of balance with too much clutter and not enough time for friends or hobbies, or whatever. It’s like how jd is always saying when you budget, you should save on the things you don’t care about so you can splurge on the things you do. With all the ads etc nowadays, it’s easy to keep mindlessly buying things that you think will make you happy and not making conscious… Read more »

YAAM
YAAM
9 years ago

Good article. Thanks April!

We enjoy 3-4 mini vacations a year. The experience of looking back at the fun times is great.

Amy Saves
Amy Saves
9 years ago

I am all for paying for an experience over a material good. It makes total sense! I will always remember my trips with friends or my significant other over a brand new outfit or shoes.

El Nerdo
El Nerdo
9 years ago
Reply to  Amy Saves

And yet, if you find yourself walking around with ill-fitting shoes that hurt you, the last thing you’re thinking about is your trip from last year. I think it was Dante who wrote that to recall happier times during misery only deepens the pain– it’s somewhere in the Inferno, but I can’t look it up right now. As far as I can understand, you can only find happiness in the present, not in the past or the future. I love the memories of the traveling I’ve done, but the lesson I’ve learned from it is that looking at the world… Read more »

chacha1
chacha1
9 years ago
Reply to  El Nerdo

Ill-fitting shoes are the first circle of Hell.

Most people could find new experiences every week just by exploring the “world” within an hour of their homes.

A lot of our pro-Stuff commenters are inferring that “travel” = international; mostly, it seems, to support their position in favor of staying home and watching TV on their new couch. 🙂

Our own country (USA, but this applies to our Canadians too) is 3000 miles across. There’s a lot you can learn, and a lot of fun to be had, without ever owning a passport.

Des
Des
9 years ago
Reply to  chacha1

Some of my fondest memories are looking back at those times in my life when DH and I would come home from work, bake a $0.99 party pizza, and watch reruns of CSI. Oh, to have that kind of leisure time again! Some of my least pleasant memories are trips I’ve taken. So, yes, if past results are any indication then I would maximize my happiness by buying a new, comfy couch and parking it every evening in front of the TV. Edited to add: Upon further consideration, I guess watching TV *is* an experience. So, then the question is:… Read more »

El Nerdo
El Nerdo
9 years ago
Reply to  chacha1

I found the quote (this from an old translation made by Longfellow in the XIX century): From the Canto V 121 “There is no greater sorrow 122 Than to be mindful of the happy time 123 In misery…” http://en.wikisource.org/wiki/The_Divine_Comedy/Inferno/Canto_V @ Chacha – Yes, but I’d argue that even local travel is going too far. We can learn to be happy without going anywhere. It’s a matter of paying attention to the senses and to the present moment wherever you are. Travel may help induce these states, but it’s not required. Just this morning my house was unusually cold (spring is… Read more »

DC Portland
DC Portland
9 years ago

Great article April! I’m looking forward to Part 2. All of what you wrote about is familiar to me as I specialize in applying the principles of positive psychology to consumer culture and, ultimately, environmental sustainability. One key point that you mention in passing, which I believe is critical to happiness, is intention. Much research exists, under the rubrick of Self-Determination Theory, that shows a strong correlation between intrinsically motivated activities and happiness, and a strong negative correlation between extrinsically motivated activities and happiness. In other words, if someone spends money for extrinsically motivated reasons (e.g. to impress others, to… Read more »

Eileen
Eileen
9 years ago

I’ve been reading GRS regularly for 15 months (and I’ve read 14 entries this month!) and I have to say that this is one of the best posts, period. I’m adding it to my budding personalized PF manual (i.e. the rapidly filling front and back pages of Your Money: The Missing Manual).

SL
SL
9 years ago

I think happiness is contentment and gratitude. I am not sure money can buy this. Whether it is stuff or experiences (or even financial goals?), wanting more than what you have can make you very unhappy and unfulfilled.

Some of the happiest people that I have known are those with the least amount of stuff and experiences (from the American mindset).

Megan
Megan
9 years ago

I think there is a difference in “stuff” and things we think about, save up for, and enjoy. For example, my MIL buys us crap off QVC when she gets bored. I hate that stuff. But I loved my Honda civic and driving it made me happy (still working on my relationship with my new car). So I consider stuff meaningless junk that we buy for no reason but good items, like experiences, can make us very happy. Also, the thing most important to me us time and money. I would rather spend time with someone than travel first class… Read more »

Brenton
Brenton
9 years ago

Basically, socially active people tend to be happier than loners. Buying stuff that depreciates doesnt have as much lasting value as a good memory. That seems fairly obvious and irrefutable for the most part.

Also, experience doesnt mean travelling to a foreign country. It could just as easily mean holding a backyard birthday party.

According to the three tips, the happiest thing you could do would be to hold several small fundraising events for your favorite cause. Its an experience, not stuff. Its not one big event, its several small ones. And its helping others.

Kyle
Kyle
9 years ago

I just finished reading that white paper, and I must say, this may be the best post that’s ever happened to me! Only time will tell. Great post!

S. Carvalho
S. Carvalho
9 years ago

I think the missing link in the Stuff/Experience debate is the idea of the hedonic treadmill. A lot of the reason why stuff doesn’t create enduring happiness is because once you own a huge flat screen tv, it becomes the norm and you can’t sustain being excited or happy about it. That giant, sharp, flat TV becomes your baseline, and anything less would reduce your enjoyment. But in the same way, experiences that are too commonplace lose their magic too. A starbucks coffee is an enjoyable experience, but if you get it every morning, it’s not really one you might… Read more »

Jacq
Jacq
9 years ago
Reply to  S. Carvalho

Agree with you S. – Sonja Lyubomirsky has a good paper on Thrift and Happiness on her site, and intermittent rewards beat out the regular coffee every day. I think the happiness researchers are going too far looking at hedonic happiness vs. eudaimonic well-being. So maybe there should be less Aristippus and more Aristotle. April, I’ve had buyer’s remorse from more than one holiday so can’t relate to your conclusion. I don’t really remember most of them very well either and don’t reminisce a lot, so I guess they aren’t great happiness areas for me. What’s usually good about them… Read more »

Kenia Perez
Kenia Perez
9 years ago

With so many comments above, I’m sure many have already pointed out: that sometimes “stuff” does bring happiness in the way that “experiences” do. I think the trick is the buy “stuff” that serves an “experiential” purpose or, in other words, “stuff” that enables an “experience.” For example, comfortable hiking boots. Those will make you very happy as in they would enable that hike up Machu Pichu. Or, in my particular case, I’m saving up for a new motorcycle – but while I have a specific motorcycle in mind, it isn’t the motorcycle itself that will make me happy, it’s… Read more »

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