A few months ago, one of the Millionaire Money Mentors brought up the subject of happiness.
He linked to this post from Humble Dollar and quoted these stats:
Between 1972 and 2018, the percentage of Americans who described themselves as very happy ranged from 29% to 38%. The number for 2021 was recently released: Just 19% of us said we’re very happy—10 percentage points lower than any prior survey.
From there we had a pretty lively discussion on who was happy, who wasn’t, why, what we could do about it, and so on.
Fortunately we had just read Happy Money: The Science of Happier Spending as one of our books of the month, so we had a bit of knowledge to fall back on (or at least some suggestions for trying to improve happiness).
I read the book in January, just before we left for Florida and found it very fascinating.
That’s why I wanted to share its highlights with you over the course of a few posts.
I always like to let a book speak for itself, so here are some selected introductory portions from the prologue:
We wanted to know if people could spend their money in less typical, but happier ways.
Uniting the five principles of this book is one simple premise. Before you spend that $5 as you usually would, stop to ask yourself. Is this happy money? Am I spending this money in the way that will give me the biggest happiness bang for my buck?
When it comes to increasing the amount of money they have, most people recognize that relying on their own intuition is insufficient, spawning an entire industry of financial advisors. But when it comes to spending that money, people are often content to rely on their hunches about what will make them happy.
And yet, if human happiness is even half as complicated as the stock market, there is little reason to assume that intuition provides a sufficient guide. Fifty years of psychological research has shown that most of the “action” in human thought and emotion takes place beneath the level of conscious awareness–and so trying to uncover the causes of your own happiness through introspection is like trying to perform your own heart transplant. You have some idea of what needs to be done, but a surgical expert would come in handy. Consider us your surgical experts.
Ok, that’s a great premise, right? How can we spend our money so we get more happiness out of it and life? Who wouldn’t want that?
So what is the book going to do to deliver more happiness? Their thoughts:
We’ll focus on one of five key principles of happy money and help you understand how, when, and why it works so that you can apply it in your personal and professional life.
And that’s just what they do. Over the next couple hundred pages they share five principles we all can use to make ourselves happier by the way we spend money. If it sounds interesting, it’s because it is. 😉
Over a handful of posts I’ll share the five principles with you and offer my thoughts on them.
Let’s get started…
Principle 1: Buy Experiences
This is the one we are all probably most familiar with — buy experiences (like trips) over stuff (like cars).
Here’s how the book summarizes this principle:
Most Americans describe owning a home as an essential component of the American dream. But recent happiness research suggests that home ownership is far from dreamy. Material things (from beautiful homes to fancy pens) turn out to provide less happiness than experiential purchases (like trips, concerts, and special experiences).
Not all experiences are created equal, and we’ll highlight the kinds of experiences large and small, most likely to provide happiness. Surprisingly even experiences that seem a little painful can produce lasting pleasure.
Uh, painful? That doesn’t sound good. Hahaha. But stick with me…it delivers on this promise.
For now, here’s how the book suggests embracing this principle:
Try this simple exercise: Think of purchases you’ve made with the goal of increasing your own happiness. Consider one purchase that was a material thing, a tangible object that you could keep, like a piece of jewelry or furniture, some clothing, or a gadget. Now think about a purchase you made that gave you a life experience perhaps a trip, a concert, or a special meal. If you’re like most people, remembering the experience brings to mind friends and family, sights and smells. Which of these purchases made you happier?
Faced with this question, some 57 percent of Americans reported that the experiential purchase made them happier than the material purchase, while only 34 percent reported the opposite. This difference was more pronounced among women, young people, and those living in cities and suburbs. But the same basic pattern emerged even for men, the elderly, and country dwellers. In study after study, people are in a better mood when they reflect on their experiential purchases, which they describe as “money well spent.”
The older I get, the more true all of this seems to me.
As I was growing up (and even into my 30’s and 40’s), I thought I got more pleasure from things rather than experiences. But did I? Upon reflection, I don’t think so.
That said, I was never a big spender on “things” anyway. I never had a fancy house, car, or any trinket like a high-end watch.
My wife was the same. Even when I tried to get her to spend money on things like jewelry for example, she didn’t want any. It just wasn’t important to her.
Now I did buy some things that were a bit pricey. For example, a custom road bike. It cost something like $3,000 if I recall correctly. But does that count as a “thing” (it was a bike after all) or was I purchasing the “experience” of riding? It’s kind of a gray area.
Anyway, the things I think most fondly upon are the times we spent as a family. It could be something as simple as attending a sporting event or as complex as taking a cruise to the Caribbean. The times we were together are the most valuable things we spent money on and are activities that bring us happiness even to this day (as we remember them).
That’s why we generally take our family with us when we travel. Recently we’ve been to Hawaii just before the pandemic hit and, more recently, visited The Villages last winter (with a return trip planned for 2023). These included our family and lots of activities (i.e. we visited several cities and Disney while in The Villages). We even get together with my daughter and son-in-law every Saturday to grill out which is a fun time (and we attend church together every Friday night). These experiences are way more valuable than more stuff.
In fact, my wife and I are in a war against stuff. We have decluttered a few times and each time we reduce the amount of stuff in our house. As a result, we have some rooms that are looking pretty bare. LOL!
Anyway, I am in 100% agreement with this principle and it’s something we’re working on. We’ll be taking trips for as long as we can.
Small Experiences are Valuable Too
Now you don’t have to have an around-the-world cruise to make yourself happier. Even small experiences are valuable:
Studies show that even when people spend only a few dollars, they get more lasting pleasure from buying an experience such as playing a video game or listening to a song than from buying a material thing like a key chain or a picture frame.
Beyond tunes and trinkets, the day-to-day spending habits of Americans provide a window into the value of buying experiences. One ongoing study has tracked how much money adults over age fifty spend on just about everything, from refrigerators and rent to alcohol and art.” When researchers link these spending choices to happiness, only one category of spending matters. And it’s not refrigerators, or even alcohol. It’s what the researchers’ label “leisure”: trips, movies, sporting events, gym memberships, and the like.
People who spend more of their money on leisure report significantly greater satisfaction with their lives. Not surprisingly, the amount of money these older adults reported spending on leisure was dwarfed by the amount they spent on housing, but housing again turned out to have zero bearing on their life satisfaction.
Research shows that experiences provide more happiness than material goods in part because experiences are more likely to make us feel connected to others.
Lots to comment on here:
- Some of our best experiences as a family were pretty cheap: visiting (other) family over the holidays, attending events together, or even going out to eat. Not pricey at all but many things that seemed routine are special in retrospect.
- As you know, I’m a BIG fan of video games. I’ve kind of been on a hiatus from them since I get so immersed (they are huge time sucks and I have other things I want to do) plus I’m trying to get a PS5 and then buy the new games I like. That said, I do love video games.
- I also love music and listen to it a lot over the course of any given day. I workout to music and generally have instrumental Christmas music playing while I work at my computer (Zeus likes it too!) 🙂
- I thought that going to movies at a theater was over for me once the pandemic hit. There’s just so much stuff streaming these days, why leave the comfort of your home to see something with other people coughing on you, munching their food like a horse, etc.? Well, it’s because it’s an experience. And I’m back to watching movies I like on the big screen (as a family). We go on Tuesdays as it’s 1) cheaper and 2) way less crowded.
- You know I LOVE my gym. I now appreciate it even more since I spent the winter in Florida and had to use their best gym, which was a couple notches below mine. I’m so thankful for my gym now. Often I’ll be there several hours a day — first to work out and then to play pickleball. It’s not uncommon for me to show up there around 7 am and leave about 10:30 am or 11 am.
- I’m not sure what happiness I get from my house, but I do like it. Plus the location of the house allows us to have nearby experiences that increase happiness. We spend way more on “vacations” (the name for our travel category in Quicken) than we do on housing (since we own our house mortgage free), but then again we have $600k+ of equity tied up in our house too, so that’s a lot. Hahaha. At 7% per year (which is what I can get on a real estate syndication, that $600k “costs” us $42k per year).
So as you can see, I’m tracking with this principle.
As we start to wrap up, let’s end with the following summary of this section:
Our discussion so far suggests that across a wide range of different types of experiences, you’re likely to get the biggest bang for your buck if:
- The experience brings you together with other people, fostering a sense of social connection.
- The experience makes a memorable story that you’ll enjoy retelling for years to come.
- The experience is tightly linked to your sense of who you are or want to be.
- The experience provides a unique opportunity, eluding easy comparison with other available options.
As you can see from my examples above, my experiences all fall within these parameters — especially the first one about including people.
Finally, they end with this:
We don’t wish to deny that material things can provide immediate delight. There’s something about the rubber bird in the hand, after all. But this material rush will likely fade, whereas the experiential high lasts much longer. Next time you reach for your wallet to buy a metaphorical rubber frog, don’t let the lure of the material induce you to forgo all the happiness benefits of the experiential.
A few thoughts here:
- I don’t think that material purchases are all inferior to experiences nor do I think they can’t increase happiness. But I do think, on average, experiences do increase happiness more.
- It’s not an either/or decision — you can buy both material things and experiences that increase happiness. I just think that most Americans gravitate to stuff over experiences so that’s why I like them focusing on this.
- This is one reason I have yet to buy a very nice car (like a Tesla). I think it would initially make me happier, but over the course of ownership I’d be less happy with it, worrying about every nick and scratch, sitting for an hour or two while it charges on a cross country trip, etc. Those things would certainly make me less happy. And given that I drive about 5k miles a year (if you take out the trip to Florida), what’s the point anyway? It’s hardly worth the effort.
One more thing to say about experiences before we close. As we noted in the book Die with Zero, experiences are often more valuable because they have a “memory dividend.” Here’s how the book describes it:
To me, that is money well worth spending. Many psychological studies have shown that spending money on experiences makes us happier than spending money on things. Unlike material possessions, which seem exciting at the beginning but then often depreciate quickly, experiences actually gain in value over time: They pay what I call a memory dividend.
In part 2 of my series on Die with Zero, they get deeper into the memory dividend as follows:
When you have an experience, you get that current, in-the-moment enjoyment, but you also form memories that you get to relive later. This is a big part of being present as a living human being: For better or worse, you re-experience that experience, often more than once. Every time you remember the original experience, you get an additional experience from mentally and emotionally reliving the original experience.
The recollection may bring you just a tiny fraction of the enjoyment that the original experience did, but those memories add up to make you who you are.
Think back to one of the best vacations you ever had, and let’s say it lasted a full week. Now think about how much time you spent showing pictures of that trip to your friends back home. Add to that all the times you and the people you traveled with reminisced about that trip, and all the times you’ve thought about it yourself or given advice to other people considering going on a similar trip. All those residual experiences from the original experience are the dividends I’m talking about—they’re your memory dividends, and they add up. In fact, some of these memories, upon repeat reflection, may actually bring more enjoyment than the original experience itself.
So buying an experience doesn’t just buy you the experience itself — it also buys you the sum of all the dividends that experience will bring for the rest of your life.
Due to compounding, your financial savings don’t just add up — they begin to snowball. And the same thing can happen with your memory dividends — they also can and will compound.
This happens whenever you share the memory of the experience with other people. That’s because whenever you interact with someone, sharing an experience you’ve had, that is an experience in itself. You’re communicating, laughing, bonding, giving advice, helping them, being vulnerable — you’re doing the stuff of everyday life.
It’s not just the memory dividend that makes you happier IMO. It’s the pre-memory dividend.
Every time we have ever planned a big trip, we have gotten a lot of happiness simply in the anticipation of it — well before the even ever happened.
A great example of this is our upcoming trip to The Villages this winter. We booked the trip in April, and for the last several months we have been talking about (and enjoying) all the things we plan to do there, the fun we’ll have, etc. We have been happier simply anticipating what the trip will be like.
We have a few more months of pre-trip happiness, then the trip itself, then the memories of the trip (which will last the rest of our lives). That’s a lot of happiness out of one trip, but that’s what experiences can do for you.
Now it’s your turn. I’m sure you have some past experiences that still bring you happiness to this day. Care to share any with us?
That’s it for principle 1. To read part 2 in this series, see Be Happier by Making Your Spending a Treat.
Bryan says
Couldn’t agree more. I’m in the midst of a 16 day trip to Europe with my wife. We cycled from Switzerland to Lyon. Took trains to Belgium and Paris. Sprinkled 3 days of work in Leuven Belgium but saw old friends while we were there. Finally celebrating my wife’s birthday in Paris. Some of this was done on the higher end some done on the lower end. But it will provide stories for a lifetime. And none them will be about the money we spent.
Dave @ Accidental FIRE says
I’ve been to over 40 countries plus Antarctica and the memories and pictures from almost every one of those trips bring me more happiness than stuff does. To me it’s no contest. And small local trips can do the trick too, it doesn’t have to be grandiose expensive foreign travel
Chris says
I’ve always been more about experiences than things. While I do love my home, I think the reason I love it is it is also mortgage free and it makes me happy to know I don’t have to stress about that. It also frees up money for trips. Before my husband died we did a trip to Florida to connect with his brother and son, and we went to universal studios. That trip always surfaces when I think about him because about a month later he was gone. I was so glad we got to take that trip and spend time with his family. Things come and go, the less attachment we have to things, the happier we are.
MI #321 says
Great article. On the part about going to the theater, I’d add that the improvements some theaters have made in the experience have definitely made it more valuable to us. We have a movie theater in our area where all the seats are leather recliners – nice and roomy, lots of space between chairs if you need to step out for some reason, and the seats are actually heated! It costs a little more, but for the experience it’s definitely worth it 🙂
Lisa says
100% agree! We’ve found that some of our best money-well-spent experiences are related to exercise which is a win-win if you ask me. And, as my husband pointed out when I was telling him about this post, we get the added benefit of spending money on the ‘stuff’ we need for such excursions. Next up: Grand Canyon hike in the fall with a group of friends and a couple of our kids.
Jen S says
On a train to Amsterdam from Paris on a 10 day work and vacation trip with my husband and twenty five year old son. Travel has always been our passion and we use these trips to continue building our experiences together. The memories continue to bring joy and ongoing discussions that inspire the next trip discussions. Priceless
Steveark says
The experiences over things argument kind of baffles me because most of my experiences require things to deliver the experience. My wife and I do our experiential things at a high level of performance. We are talented at tennis and pickle ball. We hike extreme terrain. We are experienced off roaders and we catch a lot of very big fish. So I have four tennis racquets with expensive strings that last only a few weeks at a time. My wife has even more than that as she is hunting for the right fit. I have a bass fishing boat with outboard, electric trolling motor, depth finders, etc. and a trailer to haul it and an SUV to pull the trailer. I have an off road side by side ATV with all the gear required to get it unstuck. I have pretty expensive running/walking shoes and hiking boots. We have high quality trekking poles and backpacks. Our pickle ball gear is good stuff. We have outdoor clothing that is high tech and good for all climates. If I piled that all into one place I’d think, what a mass of stuff that is. Yet I don’t value the boat except for how it helps us catch fish and spend time together. I don’t value the ATV except for the adventures it makes possible. I don’t value the shoes and clothes except for the comfort and stability they provide while we are doing what we love. The things are not important in themselves. They are merely the cost of admission to the theater of our treks and tournaments. So while I agree that buying things for the sake of having things is a fools game, buying things to have the experiences you love makes perfect sense. It’s no different than buying a plane ticket to go to experience Paris if that lights you up. But then again, I don’t know many people who buy stuff just to own it. My friends largely buy things to leverage a better experience. Like a lake house or in some cases their own private jets. It’s not having a jet that matters to them, it’s having a vastly better travel experience. So I think the whole things v ersus experience is pretty muddled in reality. Something of a false dichotomy. It’s why you buy things that determines if they add to your happiness.
My early retirement journey says
I agree with you. I like things. Lots of people like things. See #consumerdebt.
I would much rather have a nice house than a nice vacation. I think the unsaid part of this argument is that there is a baseline of “things” you have that already make you happy, and maybe the next level of happiness involves experiences because more things wouldn’t proportionally increase your happiness. So i think there is a baseline of things that make you happy.
That and also experiences they talk about seem to involve other people. For someone who has taken many solo vacations and done solo activities with no one to even share the story with, experiences don’t increase my level of happiness. So i think that is also another unsaid part of this argument.
RRT says
Got rid of most of our stuff including our house and now reside in another country and trying to learn another language.
Always wanted to live in a different culture and so glad we have tried it on for a fit. Yes some frustrations with cultural and language issues at times, but nothing we haven’t been able to work around.
Is it permanent, probably not. But has been one of the grandest experiences I could ever hope for. Spouse misses her family, so we go back once a year. I hit the states and after three days I’m ready to leave again.
Experience different cultures if you can. Like the old Mastercard ad, Priceless.
Phillip says
I’m in the same camp as Steveark. When reading the article, I stopped to think about a material purchase and a experiencial purchase before reading on and found that I really enjoyed my material purchase because it enhances my experiencial enjoyment. The material purchase that first came to mind was my 86″ TV and upgraded sound system. I’ve probably logged a couple hundred hours of enjoyment watching movies and shows on my bigger TV and better sound vs my old 65″ TV running the built in speaker. We (wife and I watch lots of movies on that TV) may get more enjoyment on that purchase over the lifetime of that TV than the same amount of money spent on our familiy vacation a couple of weeks ago. It’s a bit of a toss up. We could have bought a cheaper house but location and view convinced us the premium was worth it. Convenient location allows us a better/shorter commute experience to work and play events. The view is something we all enjoy as it’s an every day pleasure to see the view of water and moutains as our backyard, especially when the weather is dreary, which happens often in the pacific northwest. We’re planning to buy a more upscale car with a big sunroof, driver assist, leather seats, nice sound system, etc. because we’re planning to take a number of extended road trips on that vehicle when we soon retire. If we’re spending hours on the road for many days over many years, the more pleasant drive expereince will be worth it. I see it as flying business class vs coach but the cost per trip is much less.
I think the moutain bike purchase example described in the article is much more common than not.
lsam says
I guess I’m in the 34% and get happiness from material things too but it’s not black and white like the article implies. I think both experiences and material can produce happiness. I think it’s the reason you buy stuff that matters. If you buy it to show off and keep up with the Jones, you will quickly lose the happiness. If you buy it to experience it and not to impress others, at least for me the happiness lasts. My 6 year Lexus still gives me pleasure when I drive it. My 22 year old house still is a happy place for me to hang out in.
lsam says
I have also travelled all over the world and within the US and the planning and the actual trip is extremely enjoyable. I can’t say that I spend a lot of time on the memories after the trip. I’m too busy planning for the next trip 🙂 I feel every article out there is now talking about “experiences”. Feels like businesses trying to market vacations to us consumers. There are only so many cars you can buy, but they know that you can buy multiple vacations every year.
Vicki says
At age 77 with bad knees, I keep a foot in both camps: experiences and material things. My favorite experiences are 3-generation European trips with my small family. We enjoy fine meals and wines, and exploring local areas in the South of France, Paris, Croatia, Sweden.
Since I can no longer travel as vigorously, I indulge at home in theatre and concerts, excellent Italian linens, All-Clad cookware, Riedel crystal, a good watch.
I am not a wealthy person; I sold real estate until I was 70. My house is simple, my furniture is pedestrian, and my Lexus is old. I just spend the money I have where it counts, for me. Get out there and go while you can! Knees do not last forever.
Mike H says
I have grown to like the experience of planning for a vacation or trip and then experiencing it and after that to go back and re-live the memories from an album or video montage, and watch it with the family.
Something about putting the three items together makes it very satisying