Spending Money On Experiences Will Make You Happier Than Saving Ever Could
When I was a teenager, I made a weekly effort to count the money in my piggy bank, which was really a piggy bank only in spirit.
In actuality, I simply shoved my $10 allowance into a drawer in my desk, then recounted it every week to remind myself how much money I had.
Then, I'd take out a handful of tens to embark on a shopping spree at one of the three stores every 90s kid frequented: Hollister, Abercrombie or American Eagle.
So what do I have to show for all of that “saving” and spending I did as a teen?
A couple of tanks from Hollister I can still squeeze into and a savings account I only started building a few years ago.
About a decade later, when I realized how much money I owed in student loans, I cursed my teenage self for being so frivolous. Why didn't I save up my allowance? I could use that money now.
You'd think I would have learned my lesson, but when the money for my 27th birthday came in from family members, I didn't put a dime of it toward paying off my student loans. I went skydiving.
Are you horrified yet? First, I will tell you I am paying off my loans. And I'd love to alleviate the burden of having them in my life. But I'm still spending lots of my money -- money I could be saving to pay off my loans -- on crazy things like skydiving.
Remember how that allowance you had also paid for something other than trendy t-shirts? Like movies with friends, dinner with your high school boyfriend or girlfriend or gas for the car you used to drive around your friends?
Yep, you still have memories of those experiences you spent money on, and science says that's what matters.
That's right folks. Teenage you (and let's be honest, 20- or 30-something you) may have been onto something when you ignored Mom and Dad's lesson in “saving up.”
Here's the thing: Spending money can make your life better. Assuming an individual's basic biological, physiological and emotional needs are met, it's possible to find fulfillment in things only money can buy.
Maslow's Hierarchy of Needs consists of a five-stage model of basic motivations essential to the human experience. At the peak of this hierarchy is self-actualization, which can be achieved in several ways.
The kind of “behavior leading to self-actualization,” according to Abraham Maslow's research, involves “trying new things instead of sticking to safe paths” and experiencing life “like a child, with full absorption and concentration.”
What better way to experience life like a child and stray from a safe path than to spend money on a trip to a new place you've never been?
What about trying a new restaurant that offers an unusual type of food? Neither of these activities, unfortunately, comes free.
There are other, entirely free ways to achieve self-actualization, including hard work and being responsible, but part of the process of creating a meaningful life is about getting out there and living life. And living life costs money.
Imagine saving all of your money in anticipation of retirement, saving up now to buy a house when you're married or setting aside money for investments in the stock market or your 401k. These are good things to do, don't get me wrong.
But if you hyper focus on saving money all the time, when will you do those things that lead you to achieve your full potential as a person?
What about furthering your education, traveling, having new experiences and even taking fitness classes?
Now is the time to spend. It may not be the time later, when you have a child, a spouse or a mortgage.
Your 20s in particular are a defining decade, according to Meg Jay, an assistant clinical professor at the University of Virginia in Charlottesville.
In an interview with USA today, Jay says she encourages 20-somethings to “go out with people you don't usually go out with” and “accept some invitations you normally turn down.”
Jay has also explained, in a Forbes article, “the brain doesn't fully mature until your mid-20s, particularly the parts that plan for your future and manage emotions.”
This means what you “experience in your 20s becomes hardwired into your brain, and this is the best chance you have to rewire your brain and change how you think and react.”
If your 20s are particularly formative years, and what you do matters, do things that matter for your mind and body.
Now is the time to open up more career options through further education, which can cost on average between $23,000 and $46,000 per year.
See the world while you're young, and learn about other cultures. Work out while you still look great in yoga pants.
And here's the best news: Spending now on some of these things can bring you more money, and save you money, in the future.
According to The Economist, depending on your degree, you can earn about $17,500 more annually than peers who only have a high school diploma.
Once you have a master's degree, you can earn about 20 percent to 30 percent more annually than peers with just a bachelor's.
Living a healthy lifestyle also pays off. Health insurance companies sometimes offer cheaper insurance for individuals who exercise.
Additionally, fitness is a form of preventive healthcare that can alleviate costly medical expenses in the future.
Economist and University of Southern California Professor Richard Easterlin finds that spending on your health, as well as your education, leads to increased levels of happiness.
So let's see, spending money can help you achieve self-actualization, save you money in the long run and enable you to have experiences that make you happier. So why wouldn't we just spend, spend, spend?
Well, take that new toaster oven out of your Amazon cart, and put down the new tube of lipstick. There is a stipulation to this great news. Money only buys happiness when it's spent on the right things, namely, non-things.
Cornell researchers found “purchasing an experience tended to improve well-being more than buying a possession, in part because people are more prone to comparisons and buyer's remorse with goods.” Easterlin's paradox emphasizes the danger that comparison poses to overall happiness and satisfaction with income.
Not only are you more likely to get upset with your new car when the Joneses next door buy an even fancier car; you may just get sick of it.
Sonja Lyubomirsky, PhD, a psychology professor at the University of California Riverside, argues that delight with a new item, say, a piece of furniture, eventually fades as the item itself becomes a part of your norm.
Once something new is no longer extraordinary, it becomes an ordinary part of reality.
Therein lies the magic of spending money on experiences. Doing so creates memories and establishes valuable social connections with others.
If you spend money on, say, a trip for a friend or loved one, you will likely experience some kind of emotional reward.
So next time your frugal friend guilt trips you for booking that massage, or you immediately regret buying a ticket for a summertime jaunt to the beach, rethink your remorse.
You may have been onto something when you were a teenager spending your allowance on nights out with friends.
Just don't go buying a bunch of t-shirts from Abercrombie again.
Citations: Maslows Hierarchy of Needs (Simply Psychology), How you spend your time and money in your 20s will define you (News.com.au), Why your 20s are a defining decade that matter (USA Today), How You Spend Your Twenties Will Define You (Forbes), Whats the Price Tag for a College Education (College Data), Is college worth it (The Economist), Exercise Incentives For Cheaper Insurance Works Study Find (The Huffington Post), Preventive Healthcare Helps Everyone (World Research Foundation), The Economics of Happiness (University of Southern California), The Science Of Why You Should Spend Your Money On Experiences Not Things (Fast Company), Economic Growth and Subjective Well-Being Reassessing the Easterlin Paradox (The National Bureau of Economic Research), Money and happiness 5 ways your spending style matters (WebMD)