Why you should spend your money on experiences, not possessions

What is the key to happiness?

Every day we’re coerced to buy stuff we don’t need, spend money we don’t have and purchase products that will lose value sooner than the expiration dates on the food in our fridge.

The irony is that we assume the happiness we get from buying something is actually going to last. But this isn’t always the case. Often investing in material goods doesn’t bring lasting contentment. Poet Heinrich Heine famously wished people would “Ask not what I have, but what I am”, and this is exactly as it should be. People are defined much more clearly by their life experiences than their possessions.

Dr. Thomas Gilovich, a psychology professor at Cornell University who has been studying the link between money and happiness for over two decades explains, “One of the enemies is adaption. 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.”

In contrast to material things, experiences offer greater novelty and variety, which extends enjoyment. Furthermore, they can be truly shared.

The power of experiences

Gilovich and other researchers have found that experiences, as fleeting as they may be, deliver more lasting happiness than things. Experiences become a part of our identity. We are not our possessions, but we are the accumulation of everything we’ve seen, the things we’ve done, and the places we’ve been. So buying the latest Apple product isn’t going to change who you are. But taking a break from work to climb Mt Kilimanjaro most certainly will.

“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 a part of you. We are the sum total of our experiences.”

We thirst for experiences that are meaningful and significant. Experiences will enrich us, teach us, shape us and broaden our minds. So isn’t it time we invest in the memories we could be making? Not only for our personal benefit, but to encourage change within the industries that surround us? The key to boosting your return on investment is to spend money where you spend time. Psychological research indicates that spending money on experiences such as travel and creative pursuits improves our mood dramatically, whereas spending money on physical possessions has no lasting effect.

The special power of significant, shared experiences

Having seen that experiences are one of the main contribution factors to our happiness, it’s natural to wonder what kinds of experience make the biggest contributions. One useful distinction is between trivial and significant experiences. An example of the former: playing a mindless computer game. An example of the latter: reading an eye-opening, inspiring novel.

Another useful distinction is between solo and shared experiences. “We often consume experiences directly with other people” says Gilovich, “And after they’re gone, they’re part of the story that we tell to one another.” That’s why we are more likely to have a deeper bonding experience with that guy we tandem skydived with than with the guy who sat next to us on the tube this morning.

Furthermore, research shows that people who plan special experiences tend to be happier. They anticipate the trip, imagine what it will be like, actually go out and experience it, and then bring home the memories that will last forever and share them with the people who matter the most. Putting these insights together, we think it’s fair to say that one of the best ways to boost lasting happiness is to travel, challenge and inspire yourself and build memory in the process.