Money can buy you happiness; the real question is how you spend it.
Over time I’ve come to the realization that spending my money on experiences is far more fulfilling than buying material things. Hang gliding in Rio de Janeiro, horse riding through the Mongolian steppe, and taking a seaplane across the San Francisco skyline have all been experiences that have created long-lasting memories and played an important role in my personal history. Don’t get me wrong; physical items are nice (I still love my cashmere blanket), but beyond the first day of purchase, the novelty often wears off.
It turns out that this rule doesn’t just apply to me. In fact, research has shown that experiences make people almost twice as happy as material goods.1 Why? Firstly, people adapt to things so quickly. We might spend hours or days mulling over which winter coat we should buy, only to see it become a boring item from our closet. The more we’re exposed to something, the more its impact diminishes. In the end, material products are just possessions that eventually get older, break, or are replaced by newer and usually better things—think of your new handbag or iPad.
However, as sociologist Cass Sunstein notes, novel experiences "provide the basis for valuable memories that endure and that can help to define the texture of life."2 Imagine snorkeling with dolphins or riding a helicopter over an active volcano. These are experiences that you will remember forever.
The second reason why you should spend your money on a new adventure is that it is easier to purchase an experience, which involves many different stages of happiness—the anticipation of the event, the event itself, and then the memories created afterwards. Making a decision on an experiential purchase is much easier than making a decision on a material one; there’s less second-guessing and comparison shopping involved. Since experiences are unique to a person, place, and time, it’s harder to compare your ski trip in Colorado with your best friend’s beach vacation in the Caribbean, so you don’t need to worry about keeping up with the Joneses.
Once an experience is purchased, you have the buildup and excitement before, the actual activity itself, and then the memories associated with it, which become psychologically a part of you. In fact, surveys show that we are more likely to "mentally revisit" our experiential purchases more frequently than our material ones because they are more centrally connected to our identities.3
Finally, experiences make us happier than products because they are shared with others. The memories created from an experience strengthen social bonds with family, friends, and even strangers alike, transcending culture, race, and gender. Experiences are part of you and others around you—the trips you take and the things you do make up your personal history. Even bad experiences can often become stories that you tell, and in that way they gain value.4
When I first met my cofounder Oskar Bruening, he pulled up his iPhone to show me a folder of artwork he loved. It turned out that one of his all-time favorite sculptures was Unique Forms of Continuity in Space by Italian futurist Umberto Boccioni. I’d fallen in love with that same sculpture a few years before on a visit to the Tate Modern. The mutual appreciation for Boccioni united us and by the end of that day we’d decided to start Peek.com together. My memory of going to the Tate and seeing a treasure trove of art was now also associated with an even bigger story and chapter in my life—starting my first company!
So when you next turn to your friend, colleague, or family member and say "go out and buy yourself something nice," think twice. Perhaps you should tell them to go on an exciting adventure or experience something new. In the words of Elizabeth Dunn, "If money doesn’t make you happy, then you probably aren’t spending it right."
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Ruzwana Bashir is the Creative Braintrust Tech Expert and Co-Founder & CEO of Peek.com