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Why You Should Spend Your Money On Experiences, Not Things

When you work hard every single day and there鈥檚 only so much money left after your regular expenses, you have to make certain it鈥檚 well spent. Spend your limited funds on what science says will make you happy.

The Paradox Of Possessions

A 20-year study conducted by Dr. Thomas Gilovich, a psychology professor at Cornell University, reached a powerful and straightforward conclusion: Don鈥檛 spend your money on things. The trouble with things is that the happiness they provide fades quickly. There are three critical reasons for this:

鈥 We get used to new possessions. What once seemed novel and exciting quickly becomes the norm.

鈥 We keep raising the bar. New purchases lead to new expectations. As soon as we get used to a new possession, we look for an even better one.

鈥 The Joneses are always lurking nearby. Possessions, by their nature, foster comparisons. We buy a new car and are thrilled with it until a friend buys a better one鈥攁nd there鈥檚 always someone with a better one.

鈥淥ne of the enemies of happiness is adaptation,鈥 Gilovich said. 鈥淲e buy things to make us happy, and we succeed. But only for a while. New things are exciting to us at first, but then we adapt to them.鈥

The paradox of possessions is that we assume that the happiness we get from buying something will last as long as the thing itself. It seems intuitive that investing in something we can see, hear, and touch on a permanent basis delivers the best value. But it鈥檚 wrong.

The Power Of Experiences

Gilovich and other researchers have found that experiences鈥攁s fleeting as they may be鈥攄eliver more-lasting happiness than things. Here鈥檚 why:

Experiences become a part of our identity. We are not our possessions, but we are the accumulation of everything we鈥檝e seen, the things we鈥檝e done, and the places we鈥檝e been. Buying an Apple Watch isn鈥檛 going to change who you are; taking a break from work to hike the Appalachian Trail from start to finish most certainly will.

鈥淥ur experiences are a bigger part of ourselves than our material goods,鈥 said Gilovich. “You can really like your material stuff. You can even think that part of your identity is connected to those things, but nonetheless they remain separate from you. In contrast, your experiences really are part of you. We are the sum total of our experiences.”

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Comparisons matter little. We don鈥檛 compare experiences in the same way that we compare things. In a Harvard study, when people were asked if they鈥檇 rather have a high salary that was lower than that of their peers or a low salary that was higher than that of their peers, a lot of them weren鈥檛 sure. But when they were asked the same question about the length of a vacation, most people chose a longer vacation, even though it was shorter than that of their peers. It鈥檚 hard to quantify the relative value of any two experiences, which makes them that much more enjoyable.

Anticipation matters. Gilovich also studied anticipation and found that anticipation of an experience causes excitement and enjoyment, while anticipation of obtaining a possession causes impatience. Experiences are enjoyable from the very first moments of planning, all the way through to the memories you cherish forever.

Experiences are fleeting (which is a good thing). Have you ever bought something that wasn鈥檛 nearly as cool as you thought it would be? Once you buy it, it鈥檚 right there in your face, reminding you of your disappointment. And even if a purchase does meet your expectations, buyer鈥檚 remorse can set in: 鈥淪ure, it鈥檚 cool, but it probably wasn鈥檛 worth the money.鈥 We don鈥檛 do that with experiences. The very fact that they last for only a short time is part of what makes us value them so much, and that value tends to increase as time passes.

Bringing It All Together

Gilovich and his colleagues aren鈥檛 the only ones who believe that experiences make us happier than things do. Dr. Elizabeth Dunn at the University of British Columbia has also studied the topic, and she attributes the temporary happiness achieved by buying things to what she calls 鈥減uddles of pleasure.鈥 In other words, that kind of happiness evaporates quickly and leaves us wanting more. Things may last longer than experiences, but the memories that linger are what matter most.