The Secret to Happiness? Spend Money on Experiences, Not Things

The pursuit and purchase of physical possessions will never fully satisfy our desire for happiness. It may result in temporary fulfillment, but the happiness found in buying a new item rarely lasts.

We all feel richer on payday than we did the day before, but that instant gratification (that comes with out-of-this-world price tags, designer shoes and trendy clothes) is satisfying enough to be called addiction, or a bad habit. That guilt or the two voices over your shoulders is a sign that you know spending most or all of your paycheck on material items might not be the wisest choice.

It is important to remember the value of investing in once-in-a-lifetime experiences and precious memories with our loved ones over indulging on the next hot item, for, as they say, money cannot buy happiness.

Living means experiencing, not material objects

“One of the enemies of happiness is adaptation,” says Dr. Thomas Gilovich, a psychology professor at Cornell University who has been studying the question of money and happiness for over two decades. “We 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.”

So rather than buying the latest iPhone or a new BMW, Gilovich suggests you’ll get more happiness spending money on experiences like going to art exhibits, doing outdoor activities, learning a new skill, or traveling.

Gilovich’s findings are the synthesis of psychological studies conducted by him and others into the Easterlin paradox, which found that money buys happiness, but only up to a point. How adaptation affects happiness, for instance, was measured in a study that asked people to self-report their happiness with major material and experiential purchases. Initially, their happiness with those purchases was ranked about the same. But over time, people’s satisfaction with the things they bought went down, whereas their satisfaction with experiences they spent money on went up.

It’s counterintuitive that something like a physical object that you can keep for a long time doesn’t keep you as happy as long as a once-and-done experience does. Ironically, the fact that a material thing is ever present works against it, making it easier to adapt to. It fades into the background and becomes part of the new normal. But while the happiness from material purchases diminishes over time, experiences become an ingrained part of our identity.

“Our experiences are a bigger part of ourselves than our material goods,” says 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.”

If even the greats say so, maybe you should at least just try cutting the need for material things and instead, use that plastic card on a trip to a place you’ve never been. You might be surprised at how much more value you gain in your life.