As a tightwad, I realize that most of my focus is on ways to avoid wasting money as well as spending less of it. By limiting your consumption of material possessions, experiences, or anything else for that matter; you’re able to save and invest more money. Over time, your capital compounds larger, allowing you to become financially free faster! And research has found that freedom is one of the biggest factors contributing to your happiness!
Spending money is a necessary part of life. You have to do it to satisfy your basic financial needs. Not only that, but when you spend money in the right areas, your quality of life also improves!
For most people, spending is the fun part of money management. They may budget so that they’ll have enough money to buy the goods and services that bring them joy!
When it comes to spending your discretionary spending, there are two main types of expenses to choose from. You can buy either material possessions or experiences and the way you allocate to them will not only affect your emotions but also your sense of life satisfaction!
Below, we’ll explore the differences between spending money on material goods and experiences. By understanding them, you can start using your income to make yourself happier!
Material possessions are tangible items that you can touch. Once they’ve been purchased, you can use, keep, or look at them for as long as you like. A few common examples include your house, car, as well as most other status symbols.
From a young age, most people learn to associate material goods with happiness. We’re taught through American culture and marketing gimmicks that the more stuff we have, the happier we’ll be. Unfortunately, most people don’t challenge this way of thinking and are willing to work jobs they don’t like just so they can buy more goods!
In many cases, it doesn’t stop there. Some people go to even greater lengths to acquire material possessions. They may live beyond their means and go deep into debt, so they can appear rich and happy. But more often than not, they’re troubled and are stuck in a financial situation where they’ve become handcuffed to their job!
There’s no question that purchasing material goods can bring you joy. However, it’s important to realize that this happiness is often short-lived. Once the initial pleasant feelings pass, you’re left wanting more!
Whether you realize it or not, your feelings dictate many of your financial decisions. For instance, when you’re feeling down, you may buy impulse goods and other items for instant gratification. In the moment, they make you feel better. But soon thereafter, the feeling fades and you revert to your original state.
Also, spending money on material things can make you feel inadequate. Some people believe they need to keep up with the Joneses and will go to great lengths to do it. They’ll buy items to fit in or to appear successful, even if it means adding more liabilities to their personal financial statement!
In some cases, owning too many material possessions can affect your emotional wellbeing, too. Some studies found that people who live in clutter-filled homes have higher stress levels than those who don’t!
If that wasn’t bad enough, people tend to be controlled by their material goods. They spend their time and money acquiring these items, then worry that their belongings will get used incorrectly, broken, or even worse, stolen!
Despite what you’ve been told, your material possessions aren’t nearly as important to your happiness as you think they are!
People tend to splurge on material things for emotional reasons. They do it to be accepted, build their self-esteem, or influence others’ opinions.
However, emotional spending can be dangerous. Believing that your life will improve once you own a certain item makes you somewhat materialistic. Not only that, one study found that people with materialistic values are more likely to experience unpleasant emotions and feel less satisfied with their lives!
Don’t get me wrong, material possessions aren’t “bad.” They do serve a purpose. But, it’s important to realize that overspending on them is detrimental to your wallet and your health!
The conscious events you go through and observe which also impact your feelings and perceptions are known as experiences. They’re often associated with the activities and events you’re exposed to or participate in. Most of them have a price, but some of them are things that money can’t buy!
Most experiences are fleeting, too. You’re exposed to them for a moment then they’re gone and all that’s left is their memory.
Unlike most material goods, experiences are unique to those who are having them. Two people can go through the same event, yet interpret it differently.
For example, imagine two workers were laid off from their job. Depending on their mindset, one may view this as a terrible event while the other might see it as an opportunity. Getting let go may be the push they need to find a better job, start a business, or pursue their dreams!
Many Americans think that material goods will provide them with endless amounts of joy. Since these items are tangible, they believe their joy will last for as long as they own the goods. But in reality, happiness fades.
In comparison, research shows that spending money on experiences gives you longer-lasting joy. One reason is that after you have an experience, your satisfaction with it tends to grow instead of shrink!
For example, recall a recent stressful event that you’ve gone through. At the moment, it was probably uncomfortable and worrisome. But as time passes, it no longer feels that way. The once stressful event may have even turned into a moment that you now treasure or fondly look back on!
Without realizing it, many of the material possessions you work so hard to get end up becoming burdens. Not only do they take up physical space in your life, but in your brain as well. Some of them have maintenance schedules for you to keep up with, so they’ll remain functional. Whereas experiences don’t typically leave you with added responsibility. Once you have an experience, you’re only left with photos and memories – both of which can be relived continuously for free!
Many people compete over the material goods they own, too. They may purchase a product that has more features, is a better brand, or costs more money so they’ll feel superior, which isn’t healthy. However, experiences aren’t easy to compare because they’re subjective and their beauty lies in the eye of the beholder!
Your experiences give you a better sense of self and contribute more to your identity than your belongings as well. You aren’t nor can you be the physical goods that you own. However, the experiences you’ve had in the past have shaped you into the person you are now just as the future ones will influence the person you become!
According to science, it’s better to spend your money on experiences than on material possessions. Still, this may not fully sink in until you’ve explored the topic yourself. Having said that, try the following exercise.
Think back over the last 5 years and write down the 5 most expensive material goods that you’ve purchased. This can be something like your house, car, a piece of jewelry, etc
Beside this list, write down the top 5 things that have added the most value to your life over the same period. You may include something like an important relationship, pivotal conversation, or a life-changing trip.
Then, review the items on each list. Most likely, none of the items on the first list match any of the ones on the second. This shows that spending money on experiences provides you with more value than on material possessions!
Despite what society says, lasting happiness doesn’t come from material things. All too often, they leave you wanting more, which is a thirst that will never be quenched!
Your life is too short to waste on the meaningless pursuit of owning more things. But by having experiences, you’ll find purpose and meaning which will likely lead to a greater sense of fulfillment!
It’s no secret that everyone wants to be happy. But not everyone will take the steps to achieve financial freedom which would give them the time to explore how they ultimately can be!
Is your spending plan focused on acquiring more material possessions or experiences? Comment below.
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