Today we continue sharing from the book Happy Money: The Science of Happier Spending.
In case you’ve missed any of our posts in this series, the best way to catch up is to begin with the first post, Be Happier by Buying Experiences Over Things, and then click through to the other posts in sequential order.
In this post I’ll highlight principle 4 as well as give you my thoughts on it.
Let’s get started…
Principle 4: Pay Now, Consume Later
Here’s how the book describes principle 4:
In the age of the iPad, products are available instantly and our wallets are lined with plastic instead of paper. Digital technology and credit cards have encouraged us to adopt a “consume now and pay later” shopping mind-set.
By putting this powerful principle into reverse by paying up front and delaying consumption — you can buy more happiness, even as you spend less money. Because delaying consumption allows spenders to reap the pleasures of anticipation without the buzzkill of reality, vacations provide the most happiness before they occur. And research shows that waiting, even briefly, for something as simple as a Hershey’s Kiss make it taste better when we get it.
The benefits of delaying consumption are particularly likely to emerge when we pay up front. By paying now and consuming later, purchases ranging from makeup to mojitos can be enjoyed as though they were free. Even better, people are less prone to overspend when they experience the pain of paying up front. This pain can put them on the path to decreasing their debt, which, as we’ll see, provides one of the best routes toward increased happiness.
A few thoughts here:
- At first I thought this principle only applied to one part of my life (vacations, which I’ll talk about in a moment). But as I thought about it, there are many “little” things in life where this principle works, as we’ll see in a bit.
- “Because delaying consumption allows spenders to reap the pleasures of anticipation without the buzzkill of reality.” I think this is the heart of the point. Pay for something now and then enjoy the thought of it coming for the minutes, hours, days, weeks, or months until it arrives.
- “By paying now and consuming later, purchases ranging from makeup to mojitos can be enjoyed as though they were free.” I’m not sure you’d enjoy them “as though they were free”, but I get the idea — you paid for them so long ago that you’ve forgotten that you actually did pay for it. This can happen with things where you pay well in advance like a cruise or other vacation which might be paid for months before it happens.
The Financial Happiness Wrinkle in Time
The book continues discussing this principle with the following:
The rise of the credit card has not only allowed us to pay without cash, but also allowed us to pay later — pushing payment into the indefinite future. Technological innovations (along with the occasional awkward dinner date) have encouraged us to pay later and consume sooner.
While convenient, this widespread pattern — consuming now and paying later — can be counterproductive for happiness. Instead, you’ll get more happiness for your money by following a different principle: pay now, and consume later.
The French use the verb se réjouir to capture the experience of deriving pleasure in the present from anticipating the future. The se réjouir period provides a source of pleasure that comes free with purchase, supplementing the joy of actual consumption.
Researchers have suggested that we experience a “wrinkle in time,” such that events that lie in the future provoke more emotion than identical events in the past.
Some thoughts from me:
- Yes, credit cards seem built for “pay later, consume now.” In fact, it you don’t mind paying outrageous interest charges, you can pay much, much later with a credit card, well after the purchased item is gone in many cases.
- For me, the clearest example of this principle in action is vacations. We do get a lot of joy out of thinking about them, talking about what we’re going to do, and so on well before the event. This is what makes vacations so awesome IMO — you enjoy them before they happen, while they happen, and after they happen (memories). They are hard to beat for generating pleasant feelings of happiness IMO.
- The book Die with Zero calls the residual good feelings about a vacation a “memory dividend” because it keeps on “paying” you in happy thoughts for years and years after it’s over.
- We have been “enjoying” our upcoming time in The Villages ever since we got back from there in April and booked our place for 2023. We’ve discussed what we want to do, new things we want to see, and so on for MONTHS and we still haven’t gotten there! This is the power of paying now and consuming later that the book is talking about with this principle.
Consuming Later and Good Mental Health
Moving on, turns out this principle is a sign of good mental health:
The ability to generate pleasant thoughts about the future is a hallmark of psychological health.
What separates the suicidal from the rest of us is not an abundance of negative thoughts about the future, but rather an absence of positive ones. When healthy people find themselves in a funk, they tend to generate rosy visions of the future as a means of escaping their current malaise. Anticipating good things produces a distinct pattern of neural activation in the nucleus accumbens, a region of the brain linked to the experience of pleasure and reward.
And training ourselves to envision a fantastic future has real benefits. In a 2009 experiment, Belgian adults spent a few minutes every evening for two weeks envisioning several positive events that might happen the next day, from receiving a text message sent by a former flame to eating frites at a café. After two weeks of fantasizing, these mental time travelers exhibited a significant increase in their overall happiness.
Why does yet-to-be-consumed sangria taste so sweet? Because the future hasn’t happened yet. It’s inherently ambiguous, inviting our minds to fill in the details as we would like them to be.
The inherent uncertainty of the future not only allows us to view it in a more positive light, but also keeps our attention focused on it. A product we want but don’t yet own is like a distant image coming into focus. It captures our attention because we don’t know exactly how it will turn out.
This section really hit home for me because I have done the exact thing the Belgian adults did several times and experienced the same benefits.
For example, I remember when I envisioned retirement, I would often feel happy for much of the rest of the day.
The same thing happened when I thought into the future and saw a successful side hustle (this blog and then the Millionaire Money Mentors forums) — I had a good feeling for many hours afterwards.
Now I’m thinking of our future trip and seeing those same benefits. So I think this really works — at least it does for me.
Has anyone else had this experience?
Space and Dentists
Moving on, the book talks about how to get the most from this principle:
So, when is delaying consumption most beneficial in getting the biggest happiness bang for your buck?
When the delay provides an opportunity to seek out enticing details that will promote positive expectations about the consumption experience, as well as excitement in the interim. Think TripAdvisor and Birchbox.
When anticipating the purchase makes you drool, increasing the pleasure of eventual consumption. Think Hershey’s Hugs. In contrast, we do not recommend delaying neutral necessities like oil changes or unenviable expenses like root canals, which produce a more unwelcome form of drool.
When the consumption experience itself will be fairly fleeting. Think spaceflights. In these cases, delay provides a valuable opportunity to draw out the pleasure beyond the experience itself.
Hahahaha. Spaceflights. We had a conversation about those in the Millionaire Money Mentors forums. Someone asked who would go on one if invited. Turns out many were either “I would, of course!” and as many were “Not for a million bucks!” LOL.
And as for “bad” experiences, I’m in the camp of “let’s get those over ASAP” because they do have the opposite impact — instead of enjoying the thoughts of something pleasant coming you have a dark cloud of doom hanging over your head. This is the way I felt about getting a colonoscopy because so many people had told me how terrible it was. Then I did it and wondered why I had been such a big baby for so long dreading it.
Now the dentist, that’s a different story. It’s never good going in for dental work. Hahahaha.
They are right though, it doesn’t need to be something as “big” as a vacation to give positive feelings. I know I feel good anticipating an upcoming trip to the movies, a pickleball match, or something similar that will happen in just a few days.
Debt is a Happiness Killer
Next they move into an area that kills happy feelings:
Although the relationship between income and happiness is fairly weak among Americans, there is a much stronger relationship between individuals’ happiness and whether they have difficulty paying their bills. In other words, what we owe is a bigger predictor of our happiness than what we make.
Married couples with higher levels of debt show increases in marital conflict about everything from sex to in-laws.
If you carry a credit card balance that fills you with dread, the happiness boon of paying it off may be greater than just about anything else you could do with your money. The emotional benefits of paying off debt can even dwarf the benefits of building savings (though savings have an important role to play as well).
My take:
- “What we owe is a bigger predictor of our happiness than what we make.” Very interesting. As someone who has had very little debt in his life, I was always happier with my income — or at least I thought I was. Maybe I was generally happier with everything because I had no debt.
- FYI, this is yet another reason to pay off a mortgage versus investing (and it’s not mentioned much, so I’m pointing it out here.)
- “Married couples with higher levels of debt show increases in marital conflict about everything from sex to in-laws.” Money problems in a marriage seem to seep into everything. I know people who regularly make terrible money decisions and their marriages are almost always in rough shape.
- “If you carry a credit card balance that fills you with dread, the happiness boon of paying it off may be greater than just about anything else you could do with your money.” That is a pretty powerful statement. No wonder Dave Ramsey has people screaming for joy when they become debt free.
Finally, we end with these thoughts on principle 4:
In addition to increasing the pleasure of anticipation and the joy of consumption, paying now and consuming later can make our other spending principles easier to follow. Perhaps you’ve decided to buy more experiences, and fewer material things. This resolution may waver when you’re faced with the immediate, concrete benefits of a new high-end toaster or mattress. But when you won’t consume something right away, it’s easier to see the more abstract advantages of experiences. Paying now and consuming later can help us take the long view, turning us into better stewards of our own well-being.
So, what are you paying for now and planning on consuming later? Do you feel like you are happy now anticipating what’s to come or not really?
To read the next post in this series, see Be Happier by Investing in Others.
BSue says
I always get more enjoyment from imagining the things I could buy when I have money in hand. After all, I can only actually spend the money once.
steveark says
I totally agree with the concept but since we buy everything with credit cards its not possible to do that without changing the game. In our case we just don’t buy anything that costs more than $100 right away (exceptions are running and tennis shoes that wear out every few months and have to be replaced). I wanted a big tablet because my current tablet was an iPad and I see all Apple products for the inferior and inherently evil devices they truly are. But I put that purchase off for six months because I just did not want to spend $1,000 lightly. And all that time I read reviews and watched YouTube content regarding my selected device and really enjoyed the anticipation. Same thing when it is time to get a replacement vehicle. We stretch that out over months. We’ve got plenty of money but anticipation is the best part of consumption. Now for vacation trips, that doesn’t work for us, we usually decide to go on a two week road trip no more than two or three days before we hit the road. Planning is overrated. Spontenaety brings it’s own form of joy.
K D says
We are not big spenders, despite the ability to be. I think I am more in the steveark school of the joy of spontaneity. I often suffer from the number of overwhelming choices that are available in most things: vacations, vehicles, electronics, etc.
Ace says
You’ve heard the phrase: “Buy once, cry once.” In that vein, when my kids were small we’d get season passes for the local amusement park for Christmas or Valentine’s Day – long before the park opened for the season. In addition to the fun of the anticipation, when we finally went in the summer, the money spent was long forgotten. And since we got in “for free,” ol’ tightwad Dad wasn’t as grumpy about paying $25 for a basket of dry chicken fingers for lunch.
Max says
Some good points in the article. For me the value for money the good or service bring is more important than when the transaction happen in time in relation to the consumption. Great value for money make me happy for a long time.
Another experience which isnt’t directly covered in this article is that we tend to want what we don’t have. It might seem counter intuitive but after owning many many different cars from absolute budget to absolute luxury, I tended to want the kind of car I didn’t currently own. Today, I don’t own a car and that actually make me more happy and I feel free. And I am a huge car buff after all. (I do lease a car so I am not fully Buddistic just yet.) 🙂
Cheers