Is Spending Money on Experiences Really Better?

life experiences

Everywhere I look, I see advice to spend more on “experiences.” This is usually coupled with pictures of people jumping out of airplanes or backpacking around the world. Things that ignite a serious sense of  Fear Of Missing Out (FOMO).

I was excited when I first discovered this trend. Finally, we can all enjoy life outside of what money can buy! But then I realized – we’re still talking about spending money.

Preaching the benefits of spending money on life experiences is great, but it masks an underlying issue. That it’s still not “cool” to save money. That saving is boring and spending is fun.

In the end, is spending money one way versus the other truly better?

Maybe money can buy happiness

I’ve always bought into the fact that money and happiness don’t belong together. But maybe they do – when it comes to experiences, that is.

Dr. Thomas Gilovich, a psychology professor at Cornell University, decided to dig deeper into the connection between having money and being happy. What he found is surprising: money spent on experiences versus things can, in fact, lead to happiness. What’s more, the happiness from things will dissipate (which could explain why we often feel the need to buy regularly). But why does happiness increase when we spend money on experiences?

According to Dr. Gilovich, it’s because we adapt to having things, but our life experiences become who we are. Even the bad experiences, when recounted and turned into a great story, can feel good in the end.

The Atlantic further disseminates this study to explain why experiences feel so good. Turns out, where adaptation kills happiness related to things, anticipation drives happiness related to experiences:

Essentially, when you can’t live in a moment, they say, it’s best to live in anticipation of an experience. Experiential purchases like trips, concerts, movies, et cetera, tend to trump material purchases because the utility of buying anything really starts accruing before you buy it.

Waiting for an experience apparently elicits more happiness and excitement than waiting for a material good (and more ‘pleasantness’ too—an eerie metric). By contrast, waiting for a possession is more likely fraught with impatience than anticipation.

Essentially, you can feel joy just thinking about a trip you have planned. But waiting for something you want to buy is a drag.

The most interesting result of this study is that we can derive actual happiness from spending on experiences. So, does that ever backfire?

When peer pressure kicks in

Every time I look at yet another picture on Instagram of the cliffs of Santorini or a cabin nestled in the foothills of snow-capped mountains, my weekend plans pale in comparison.

Peer pressure doesn’t just relate to our clothes, cars, or homes. It can also relate to how many stamps we have in our passports. Whether it’s seeing pictures of a friend’s adventures on Facebook or having to admit at a dinner party that you’ve never been to Europe, peer pressure in experiences is real.

What’s worse, it can feel very lonely.

In a conglomeration of studies on negative emotions, results showed we tend to think we’re alone in our negative emotions. If you’re feeling bad about yourself because you can’t afford to travel, you’re not likely to think that your peers are in the same boat.

Add that to social comparison theory, which states “we determine our own social and personal worth based on how we stack up against others,” and you have a brutal combination.

In short, if we go on Facebook and witness one great adventure after the next, our self-worth could suffer. And we’re more likely to feel like it’s just us feeling that way, which makes us less likely to talk about it – the one salve to feeling alone in something.

What happens if we try to fix this unhappiness we feel by buying life experiences we can’t afford? We open ourselves up to debt – and its best friend, depression.

Creating happiness by creating limits

With all the studies and articles talking about the joy you can get from spending money on experiences, I’ve yet to find any that caution against spending beyond your means. So how can we enjoy the happiness we get when we spend money on experiences without the side effects of debt?

By creating limits around our spending – even if it’s spending on life experiences.

If we spend so much money on experiences that we fall into debilitating debt, chances are a lot of the happiness from the experiences will fade as anxiety over debt increases. But if we engage in careful budget planning and only spend the money we can afford, then we can maximize that happiness.

Don’t forget: Dr. Gilovich said anticipation is part of the happiness you feel when you buy experiences, not things. Maybe budgeting really doesn’t have to suck after all!

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