When dealing with personal finance, it is important to remind yourself from time to time that our most valuable assets are things that cannot be bought. Family and friends would certainly apply to this category. So would your health, time, and knowledge. It would be impossible to put a price tag on any of the above.
So let’s step back from discussion about saving, investing, and accumulating money, and let’s talk about how we spend our money. When it comes to spending your dollars wisely, some purchases may be wiser than others–at least as far as happiness is concerned.
Let’s say you get a bonus at work. Do you spend it on a new toy (whatever your “toy” of choice might be) or a vacation? If you want to be happier, you should spend it on the latter. People receive more enduring pleasure and satisfaction from investing in life experiences than material possessions.
Taken from a practical perspective, this seems to make sense. If your house was burning down and you only had time to grab one material possession, what would it be? For many, it would be their photo album. The memories of different experiences that those photos conjure up are priceless.
A national survey involving more than 12,000 participants, conducted by Harris Interactive on behalf of Northwestern Mutual Financial Network, found similar results. When asked which made them happier, an experiential purchase or a material one, most people chose the experiential purchase.
Here’s some of the reasons why:
Experiential purchases are more open to positive reinterpretations. For example, if you go on a hiking trip, and the weather is terrible, you might not view it as a pleasurable experience in the here and now. Instead, you may view it as a challenge, and over time remember the positive aspects of the experience more than the negative aspects. With material things you can’t do this, because they are what they are.
Experiential purchases are a more meaningful part of a person’s identity. Our culture highly values accomplishing goals and challenging oneself. We strongly value accomplishments. Experiences tend to be associated more with deeper personal meanings than possessions.
Experiential purchases contribute more to successful social relationships. Experiences foster relationships because you tend to do things with other people, so there is a great social aspect to it. Furthermore, we often share stories about experiences because they’re more fun to talk about than material possessions.
So when you are out spending your hard earned money remember that spending on things you can do, as opposed to things you can have, will make you happier in the long run.
8 thoughts on “Spend Your Money on Doing Things Rather Than Owning Things”
Experiences do give you memories but things do as well. I am not putting greater value on material possessions but when I look at my books, the stereo I have owned since high school and other things memories flood my mind. I can look at my bookshelf and remember what I was doing in my life while reading a certain book. Sentimental value is a big part of owning things. Going on trips also build memories. Great post.
Make money to enjoy spending them! But make more than you spend – that’s Rule #1.
– Steven Burda –
It has taken me years to get rid of 50% of my physical junk. And I find I don’t miss it one bit. The manufacturing guys over at Evolving Excellence also commented on home clutter this weekend.
I’d make sure my family was outside, and watch it all burn if I couldn’t go back in to get anything else out.
Otherwise, I’d have to say the first 2 things I’d get away from the house would be our cars (they sit in our 2 car garage all the time). Then I’d go for something like the photo albums and/or pictures.
Our important paperwork sits inside a safe, in our basement. And the safe is rated to withstand fire temperatures for 4 hours. I wouldn’t want it on our first or second story, because I think if the floors burned and the safe dropped, it may open up wide.
doing the right thing is importance :)
I have heard this statistic/study quoted a lot lately and I was at first surprised by it. But I guess it has a lot to do with marginal utilities, perhaps? I used your site as a source in my post about why traveling abroad is a good idea. Thanks for the source and the interesting take on the issue of whether it is more intelligent to spend your money on events or things. Happy new years.
Lately people are concentrating indeed on accumulating meaningful experiences than paying for something more material, like furniture, expensive cars, etc. Our grandparents invested almost all their money in their houses (at least my grandparents and even parents did it). I’m much more inclined to invest in myself, in traveling, learning more about new cultures and new possibilities of personal growing.
I traveled to Europe multiple times before I had a chance to live there for a year. I probably spent a good $25K touring the different countries, eating, drinking, etc. I can’t think of anything I could buy (including a car), that I’d trade for all the great memories I have and all that I learned. We have two well worn (and maintained) cars that combined are 21 years old. Cars are just a way to get from point A to point B.