A lot of us have realized buying more stuff doesn’t make us happier.
We rationalize about that new house: “Oh, but prices will be higher in the future. It’s a good deal. Interest rates are low. Eventually we’ll want something bigger anyway. We can entertain.”
In Seth Godin’s book, The Practice, he has a great, simple question: “What’s it for?” If you want to buy something, think deeply, “what’s it for?” You’ll likely find you’re falling into the same trap as always – if you buy it, you will be happier.
Research has shown people are no happier after buying a new house. This applies to almost every material purchase. However, this doesn’t mean we can’t spend money in a way that does increase our happiness.
Spend Money, Be Happy
I’ve read the book Happy Money at least five times. It’s a good reminder when I inevitably fall back into the pattern of expecting purchases to make me happier. The premise of the book is that there are ways, proven with research, we can spend money to get a boost of happiness.
In my experience, happiness isn’t an outcome we achieve, it’s something we create every day by what we think, say, and do. We don’t do one big act or achieve one big objective and become permanently happier. Instead, we become happier through countless small acts every day. It’s changing our habits that makes us happier, not changing your outcomes.
Here are my favorite three ways to spend money to boost happiness:
#1: Buy Experiences
First, buy experiences, not stuff. Imagine spending $100,000 on a nice SUV. How much happier do you think you will be after that purchase? You may think “a lot”. The truth is, not much.
Now, imagine spending that same $100,000 on five nice, adventurous vacations ($20K each) with the people you love over the next two years. How much more do you think you’d cherish and grow from those experiences compared to the SUV? Likely much more. Those memories will last for the rest of your life. The joy from driving the SUV compared to whatever car you have now won’t matter much in the long-term.
We spend less money buying experience too. We only have so much available time, so we can only spend so much on experiences. There are millions of things we can buy. Most don’t require time, just money. No matter how much money we have, there’s always something else we can buy. With experiences, we get more happiness bang-for-our-buck and we’re less likely to overspend compared to buying stuff we don’t need.
#2: Spend Money on Other People
Second, spend money on others rather than yourself. Even better, spend money that you get to enjoy with others for the maximum boost in happiness.
Say you’re thinking about buying yourself a $5,000 purse or watch. You might enjoy it. You might not use it that much. Others might be somewhat impressed by it. Your happiness likely won’t be affected much.
Instead, say you have a family member who is the biggest fan of your city’s professional basketball team. What if you took that whole $5,000 and bought two courtside tickets for you and that family member to attend a game, even if you don’t like basketball? Because you’re spending money on someone else and you experience their delight with them, you’ll likely get a much bigger boost in happiness.
Fortunately, the amount of money we spend almost doesn’t matter. We can get a huge boost in happiness by buying and enjoying a $5.00 coffee with a friend.
The next time you think about buying something for yourself, especially a large purchase, think about how much happier you might be if you broke that large purchase down into countless small purchases you get to enjoy with others.
#3: Buy Now, Consume Later
My wife is much better at this than me. I don’t like spending money until I absolutely have to. As a hard-wired planner, she books trips and experiences months out. According to happiness research, her approach is right.
By purchasing something now and enjoying it later, we separate the financial pain of the purchase from the enjoyment of the experience. Say you go to New York City for the first time and want to see a broadway show with your significant other. Rather than buying the tickets the day before, if they’re even available, you’re better off buying them at least six weeks before the show. By the time you get to enjoy the experience, you’re mentally separated from the financial cost. You also get to enjoy the anticipation of the experience for weeks before attending the couple hour long show.
Spending money the right way isn’t easy. I’ve been working at it for about five years. I’m still tempted to buy more stuff. I still think, at least subconsciously, that buying some new thing will make me happier.
Spending money in a way that’s most likely to make us happier takes work. But, there’s no other way than to keep reminding ourselves of these principles regularly. Eventually, new habits form and we’re less likely to spend money the same ways as almost everyone else who unsuccessfully tries to buy happiness.
Try out one of these principles for yourself this week. Buy an experience. Spend money on someone else. Pay for something now you get to experience later. You’ll be happier than if you spent the same money on another item to store away in your closet for years before you Marie Kondo it out of there.