The holidays are coming. Not only do we begin brainstorming gifts for friends and family, we also think about our own wish list. Before you spend a whole lot of time, energy, and money in this pursuit, listen up.
Research keeps showing us that the best and most satisfying presents don’t come in Santa’s big red bag. While it may seem that a better mousetrap will last a lot longer than concert tickets, it’s just not so.
In his delightfully titled article, “Waiting for Merlot”, Cornell professor Thomas Gilovich reports “People think that experiences (money spent on doing) are only going to provide temporary happiness, but they actually provide both more happiness and more lasting value” than material goods (money spent on having).
We already knew a lot about why experiences give us more positive bang for the buck. Not as likely as “things” are to be negatively compared, experiences are a meaningful part of our identity, and contribute more to successful social relationships.
Now we know something more about why money spent on experiences trumps spending on stuff. The happy anticipation begins as soon as we start thinking about the experience and lasts far longer than the experience took to have. We’re significantly less happy when we’re waiting to receive a “thing.”
While it’s true that more income is correlated with rising happiness, it is not spending that puts a kick in our step, but giving our money to others. Using data from 100 countries, the results of a recent Gallup World Poll suggested that in every single country, rich and poor alike, giving increased happiness more than spending. “The fact that we were able to observe the same effect that we’d seen in Canada in places like South Africa and Uganda was probably the biggest surprise of my career,” researcher, Elizabeth Dunn told the Wall Street Journal.
“A lot of us think we’ll give to charity one day, when we’re richer, but actually we see the benefits of giving even among people who are struggling to meet their own basic needs.” The key about giving is that you don’t need a big dollar amount to make a great impact.
Spending on experiences and spending on others will make you happier, and happier for longer, but not when you are in debt. Savings are good for happiness; debt is bad for happiness. According to Professor Dunn, debt is more potently bad than savings are good. If the restaurant you’ve chosen for your family reunion is at the cost of going into debt or incurring more debt, the negative impact of that looming credit card bill will overrule the positive impact of the event.
Save that dream vacation and give yourself the biggest present of all by paying down your debt, or better yet, paying it off. At all costs, don’t increase it. So how can you defeat the impulse buy, whether it’s an experience or a thing? Hot-off-the-press research shows that the gratitude we bring to mind later this week on Thanksgiving is the best antidote to overspending; generosity doesn’t hurt either.
To read the Wall St. Journal article Can Money Buy Happiness, click here.
To read the New York Times article How to Defeat the Impulse Buy, click here.
Carrie Rattle is a Principal at BehavioralCents.com, a website for women focused on mind and money behaviors. She has worked in the financial services industry for 20+ years and hopes to inspire women to better prepare themselves for financial independence.