Today, many successful people know buying more stuff doesn’t make you happier. It doesn’t mean it’s not tempting everytime you want something.
You 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 basically no happier after buying a new house than before. This applies to almost every material purchase. However, this doesn’t mean you can’t spend money in a way that does increase your happiness.
Spend Money, Be Happy
I’ve read the book Happy Money at least five times. It’s a good reminder for me 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, you can spend money to get a boost of happiness.
In my experience, happiness isn’t an outcome you achieve, it’s something you create every day by what you think, say, and do. You don’t do one big act or achieve one big objective and become permanently happier. Instead, you become happier through countless small acts every day, forever. It’s changing your habits that makes you 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.
You’ll likely spend less money buying experience too. You only have so much available time, so you can only spend so much on experiences. There are millions of things you can buy. Most don’t require time, just money. No matter how much money you have, there’s always something else you can buy. With experiences, you get more happiness bang-for-your-buck and you’re less likely to overspend compared to buying stuff you 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 you spend almost doesn’t matter. You can get a boost in happiness by buying a $5.00 coffee with a friend and enjoying it with them.
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 more of a planner, she will book trips and experiences months out. According to happiness research, her approach is better.
By purchasing something now and enjoying it later, you’re separating the financial pain of the purchase from the enjoyment of the experience. Say you go to NYC 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 available, you’re better off buying them at least six weeks before the show. By the time you get to experience it, you’re mentally separated from the financial cost. Instead, you get to enjoy the show without thinking about what else you could have purchased with the same amount of money.
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 you happier takes work. But, there’s no other way than to keep reminding yourself of these principles regularly. Eventually, new habits form and you’re less likely to spend money the same ways as almost everyone else who 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.