The intersection of money, consumption, and happiness is a crucial topic.
- Higher incomes do not make you happy, after a certain point. (After you’ve read this post and watched the video you’ll know the exact income required for happiness!)
- Comparing yourself to people with more possessions or money has been shown to make you unhappy.
Perhaps it’s our growing understanding of these truths that’s led to the new cultural trend (or revival) of seeking experiences instead of chasing money or material goods.
Ditch the consumer lifestyle, and consume life instead!
Best-selling writer Tim Ferriss has based his career around the idea you should generate just enough money for travel or other experiences – which he explicitly contrasts with grinding away to pay down a mortgage for 30 years.
Then there’s Man Vs Debt – one of a posse of leading bloggers who’ve forsaken material goods in favour of experience and travel.
Do you get what you pay for?
In a recent debate on the Financial Samurai blog, I was surprised how nearly everyone favoured spending money on experiences over stuff.
Don’t get me wrong – I don’t like spending money on either! When salesman see me coming, they scratch their chins awkwardly and sidle off to extract haemoglobin from nearby stones.
Yet I do question the new wisdom that says buying happy experiences is always better than buying something solid and real that will potentially bring you happiness today, tomorrow, and beyond.
It’s a more difficult question than it looks. If we spend money on, say, travel:
- Are we buying the experience of being happy on a tropical beach?
- Or are we buying the memory of being on that beach?
A week lasts for the blink of an eye, in comparison to a 70-year long life. The memories are forever – well, what you can remember are – but they cannot take you back to truly re-experience the beach for even a microsecond.
Why not buy a posterbook for 1/1,000th of the price, memorize the pictures, and try to convince yourself that you went?
Experience versus memory
I jest, but only a little. There is something profound at the heart of this debate.
Let’s bring in an expert, Daniel Kahneman. Perhaps the world’s greatest living psychologist, Kahneman won the Nobel prize for Economics for work on behavioral economics – exploring the irrational ways we make decisions about risk.
Kahneman recently gave a TED lecture about how we experience happiness very differently to how we later remember it. This difference has consequences for how we run our lives.
Beware: This video could change more than just how you spend your money.
A conclusion? Not likely
You’ll forgive me for not writing a snappy three line summary of what this video tells us about how to spend money. I’m not about to pick up the Nobel Prize for solving one of mankind’s deepest mysteries in a blog post.
But I do find this subject and Kahneman’s lecture fascinating.
My first thought is that what matters most is structuring your life in a way that’s important to you, and then using money to create not just memories or even happiness in the present, but also a future you can look forward to, and a sense of satisfaction about your past.
Like this you’re getting more from your money than just a memory – you’re getting aims, goals, and achievements, too.
But that’s me – I naturally take a long-term view on life, and buy future income like other people collect stamps.
Your memory mileage may vary!
Please do share your thoughts on whether the fleeting long-term memories from an experience are really worth the price of entry – or whether you’re better off buying a motorbike – in the comments section below.
(Image by Wonderlane)
Are you wasting your money on memories?
Are we talking “Total Recall” here?
I agree with the general thrust of this. A lot go on round the world travel jaunts and talk of their splendid times they have of it and I’m sure they do. But everyones eyes glaze over so they can’t talk about it much for long. Change the story!
In contrast I can sit in my drawing room in my well loved leather armchair surrounded by things that won’t go vanishing as my old noggin goes. (Not called oldpro for nothing!)
Each to his own I spose.
Great topic, great post.
For me the happiness isn’t about either really. I mean, I love good memories and I have some “things” that increase my happiness… but the real source for me is freedom of time.
A powerful source of happiness for me is being able to wake up each morning and maintain control over how my time is spent (rather than having to work a mediocre job to repay debt.)
.-= Matt Jabs on: SEP IRA Contribution Question: AJ Answered =-.
Here’s the whole in your argument right here, the use of the word ALWAYS.
“Yet I do question the new wisdom that says buying happy experiences is always better than buying something solid and real that will potentially bring you happiness today, tomorrow, and beyond.”
Obviously it’s not always the case, but in my case it is often times the case, perhaps 70%. That percentage has increase over time, the more money I have. As you say, after a certain point of money, it stops bringing you happiness… what I think that is is material happiness. Like going from a manufacturing industry to a service industry. Service = experience.
If I had to worry about money too much, I couldn’t decide in Saturday night to buy those two last minute roundtrip tickets to Hawaii for $1,780. I thought about it a little, but then I went for it because we love good times.
Have all three, experiences, memories, and things if you wish.
ps haven’t watched the video b/c I gotta go! Tonight I’ll watch.
Best, Sam
.-= Financial Samurai on: Home Mortgage Refinancing Tips For A Smarter You =-.
Daniel Kahneman is probably the greatest money expert alive today. This is the real turtle soup and not the mock.
Rob
.-= Rob Bennett on: My E-Mail to Atlantic Monthly Associate Editor Matthew Yglesias =-.
I am completely with MattJabs. The freedom to do what I want is what brings me the most happiness, regardless of whether that is take the trip to Hawaii, a la FS, or buy a loving leather chair, a la, OldPro.
.-= Evan on: Experiences with Auto Refinancing – HELP ME! =-.
I agree that having freedom makes me happy.
But at the same time, some material objects make me happy. I drive an SUV which allows me and my friends to all hang out in the same vehicle when we go out to eat or when we go sledding in the winter. So maybe “stuff” can make us happy by being a means to an end?
Thanks for all your comments, guys! A friend suggested to me I jump in with big replies on Monevator too often, which can ‘close’ the discussion, so that’s all I’ll say for now.
Other readers – what do you think of their points? Seems like freedom is winning out for readers just like for cowboys? 😉
I think that experiences and memories have their place in the happiness equation. I think relationships trump possessions when it comes to fun family times. Having the time freedom is something I would like more of as well.
I was mulling this question over today because my freshman year of college, before I tracked any of my spending, I went to like 10 concerts over a half a year. It must’ve cost upwards of a grand.
I was thinking to myself, was it worth it? To me it is worth it. Would I be any happier with another $1,000 in my account? Maybe, but I still think about those memories I created on a semi-regular basis not to mention how fun they were when I attended.
Great discussion topic!
Austin @ Foreigner’s Finances
.-= Austin on: The 5 Books That Changed My Money Life =-.
I think concerts are the worst. I went to dozens and dozens in college (probably near to 100) though loads of them were for free because I used to review them for the college paper and other places. It was a great lifestyle, but I doubt if I started talking now I could recount memories for more than 15 minutes from all those hundreds of hours.
I guess as Ken says it’s all about balance – dividing your money between stuff / experiences / freedom, and the savings to make sure you can have all three in the future.
Very insightful article! I believe it’s not possible to make a general statement on whether money makes people more or less happy. Money comes with a whole set of new elements that may have
good or bad impact on our happiness, and depending on how susceptible we are to every one of them, the conclusion will go one way or the other (i.e. different from
person to person).
I recently made an effort to provide a more comprehensive picture of what these ad- and disadvantages are. I invite you to have a look at Money and Happiness
and tell me what you think!
Thank you,
Nick
Gosh, I feel so lonely Monevator is not jumping in more often lol.
.-= Financial Samurai on: Sometimes Saving Money Is About Principle =-.
So if I have a really crappy life, then have a good last year before I die… I’ll remember having a good life while in heaven? 😉
.-= Ryan @ Planting Dollars on: Waikiki Site – Adding Wordpress and Thesis Theme via FTP to Bluehost =-.
I like how he distinguishes between being happy in your life and being happy about your life. The physical part and mind part of human being don’t always work in sync.
I think your personality and tendency to use either part play a big role here. Would you say someone who is more physical/athletic will have an enhanced version experiencing self? People like this will spend more on experience, which makes sense. The problem is, most of us aren’t like that, but we’d like to think that we are (memory self). In a way, we don’t need to spend too much money on bodily experience if we can “manipulate” our memory.
I have developed similar view lately, although mine will be more compromised. Hope I can write about it as well as you did.
Btw, a trip to Antartica for 3 weeks could set you back around 20 grand Aussie or more. He should spend more than 25 minutes reminiscing 😀
.-= Bytta@151DaysOff on: Day 22: Where Do You Draw Inspiration? =-.
I think there are a lot of trips that are worth the cost. My honeymoon was expensive but the 10 days we spent in Hawaii were amazing and something I wouldn’t trade back for double or triple the money.
I think the key is just like anything else, to attain balance. Don’t spend your entire savings or every spare moment (and nickel) chasing these types of things. If you save money and save the time for special occasions, they will be more memorable.
.-= Money Beagle on: Net Worth Review: March 2010 =-.
Interesting thread.
I personally am a huge believer in saving up for travel experiences (I am a travel junkie)…I mean, what else are you saving up for?
Not to be morbid here, but the end of the day, if you’re lying on your death bed, and you are doing your life review, wouldn’t you want to say that you’ve experienced different cultures around the world, and that you have seen humanity everywhere?
When you’re lying on your death bed, will you be happy that you have that million dollar house, or that 56″ flat screen LCD TV, or that porsche?
Memories and experiences are so valuable. That being said, memories and experiences with loved ones of course trumps everything else.
I agree with Money Beagle- it’s all about balance.
Great discussion topic!
.-= youngandthrifty on: youngandthrifty Net Worth Update: March 2010 =-.
just finished Haidt’s ‘Happiness Hypothesis’. Superb book and a must read for those who have an interest in linking up investing (in the abstract) and what investing is actually for…
I’m rather late in joining this discussion (about 4 years) but it strikes such a chord I have to comment.
At last, some one publicly scrapping scrap books. They are scrap after all. From an evolutionary perspective we are primed for hanging on to very little (that’s rum coming from a bit of a hoarder) but part of me hankers for a non-life threatening disaster that will get rid of all the stuff around me (maybe a metal and plastic devouring moth infestation?).
How did we as humans in our pre technology state manage this memory and experience conundrum? Simple. Music, art and literature. Stories, songs, cave paintings and my personal favourites: stone hand axes. Anything that is burnable: forget. The simpler the better and more memorable. And it would have to be REALLY WORTH committing to memory in a song or cave etching. A person would need to have a very strong relationship with someone to make or hand down a beautifully carved, used and memory infused stone hand axe for them. The rest is just noise.
I too can hardly remember the many gigs I attended at college; perhaps it’s all a smokescreen. Memory is really a tool for us humans to avoid danger and find comfort, food and shelter.
@Minikins — Thanks for sharing your thoughts on this old post, and your generous words on that other old post the other day. It’s heartening to see someone working their way through this old stuff. (Although… um… perhaps it does runs lightly contrary to the idea that old stuff is disposable. 😉 )
p.s. Yes, I’ve also had daydreams about my house burning down and all the *stuff* going with it some day I’m out taking the handful of possessions that are *really* special keepsakes to a safety deposit box.