One of my favorite small business blogs, Signal v. Noise, had a great post today on getting your business noticed. It referenced a research paper that compared the impact on happiness from spending on experiences to the impact from spending on stuff.
While a bit technical (hey, it’s a research paper), it’s a really interesting read - you can get the full PDF here
Conventional wisdom in the personal finance community says that experiences beat stuff, hands down.
The paper backed this - 57% of the participants reported that experiences made them happier while 34% reported that material purchases made them happier
Some of the more interesting demographic differences the paper surfaced include:
- The effect was bigger for women (62% experience vs 30% material) than men (51% experience vs 38% material)
- The effect was bigger for urban or suburban residents (56% experience vs 35% material and 59% vs 31%) than rural residents (49% vs 40%)
- As income increased, the percent reporting experiential purchases went up (roughly 45% vs 40% for the lowest income range and 70% vs 20% for the highest income range)
Experiences All the Way, Right?
Our family just got back from our annual road trip, where we spent 12 days traveling the northwest United States and dropped about $3400. Would I trade that for a 75-inch, 4K ultra HD flatscreen?
Not a chance
But the road trip is over; the TV is something I can enjoy every day, right?
The TV will eventually die but my memories of the time I spent with my wife and kids will stick with me forever
The paper included a quote from Luxury Fever by Robert H. Frank that summarizes my thoughts exactly:
Increases in our stocks of material goods produce virtually no measurable gains in our psychological or physical well-being. Bigger houses and faster cars, it seems, don’t make us any happier.
Luxury Fever: Weighing the Cost of Excess, Robert H. Frank
At this point, I’d be easy to say, “Stop buying stuff - experiences would make you happier!”, but I have to admit that while reading the paper, I felt like something was missing.
Defending the Other Side
While more people indicated that spending on experiences increased their happiness higher than spending on material goods, there was still a significant percentage of people that indicated the opposite.
In the personal finance community, there’s a strong focus on the experience side; those who focus on stuff tend to get shunned.
But if these people really are getting more happiness from buying stuff, is it really such a bad thing?
We tend to treat this issue as black and white, but it really is a personal question that varies depending on who is being asked.
The risk of making this black and white is that we alienate and misdirect people who actually do get more happiness from buying stuff.
Is it really the best advice to everyone to bail on stuff and focus exclusively on experiences?
We All Can Benefit From Both
Earlier I said that I wouldn’t take a ridiculous TV over going on our road trip.
But what about a different example? Would I take a new laptop over a week by myself in New York City?
For me, experiences are infinitely more meaningful when shared with my family. I’m also more of a nature guy than a big city guy, so being in a crowded city by myself would just stress me out.
A new laptop on the other hand would run faster and would stop telling me that the hard drive is almost full.
Not that this happened three times while writing this post…
Writing blog posts would be faster, development for Thrifty would be easier and we’d have less laptop conflicts since we only own one “non-work” computer.
If you gave me $2000 and said I had to spend it on one of the two above, getting the new laptop would be an easy choice for me.
This brings us back to the point of being thrifty, frugal, or whatever term you want to use. Money is a tool for you to use on what’s important…to you.
Use your money for whatever brings you sustained joy and helps you be your best self
Spend on Your Priorities
Thinking about where I’d put extra money for both experiences and stuff, there are things that would bring me sustained joy in both categories.
If our lawnmower dies, I’d love to replace it with an electric one so I can bring down the noise level and take advantage of cleaner energy.
Every time a light bulb burns out in our house I get happy about the fact that I get to replace with an LED bulb.
The money we spent on a box planter for our vegetable garden was well-spent - I’ve gotten some really good lettuce and cilantro already this year and am looking forward to the carrots and tomatoes. I anticipate getting another planter (or two) next year.
I want more opportunities for date nights for my wife and I to get good quality time together.
I’m always up for more fun adventures with the kids where we can explore and learn.
As a family, travel is a priority; we’re making good progress on hitting all 50 states with the kids and international travel is certainly on our minds for the future.
There isn’t a fixed, correct answer for the “experiences versus stuff” debate; you’re going to find joy from both sides.
It pays to hear different viewpoints and understand how different people live, but what you spend on is very personal - only you can decide what’s right for yourself.
Don’t let someone else tell you what to spend on - put your money where your heart is