Research suggests that experiences – a family trip to the Grand Canyon or a French class – are often better investments than things. In one recent study, nearly 60 percent of participants believed the former to be more “worth it” than the latter. That is because we identify more with our experiences, so we feel more strongly about them in retrospect. It’s also because of a tic in our psychology: Humans get used to things, even those we’ve long coveted; having them becomes the new normal and we barely notice anymore. “This is especially true for objects like a new couch,” says Laura Vanderkam, author of All the Money in the World: What the Happiest People Know About Getting and Spending.”No matter how excited you are when it’s delivered, pretty soon it’s just, well, part of the furniture.” But experiences are by definition unique. Think about it: A weekly dinner at the same time with the same people is still different each time.
Memories are one of the secret weapons of happiness because they offer a double dip: Thinking back on something pleasant, science has shown, stimulates the same delight centers in the brain as the original event did. “Say you spend $300 to take a cooking class,” says Sonja Lyubomirsky, PhD, author of The How of Happiness. “Talking about it later, looking at photos of the food you made, writing a Facebook post – all these compound your happiness.”
2. Stay within your budget.
The bedrock rule for enjoying your money is to make sure it’s really your money – not a bank’s or other creditor’s. As many Americans have discovered, being in debt is painful, and to our brains, say researchers, pain registers more strongly than pleasure. “The data show that negative experiences have three to five times more impact than positive experiences,” says Dr. Lyubomirsky. “So agonizing about how to pay your bills if you splurge on a new car will feel much worse than buying that car will feel good.” After conducting hundreds of Gallup surveys, Tom Rath, coauthor of Wellbeing: The Five Essential Elements, discovered that people who report a lack of money fears are twice as happy as those who simply make more, and income level has almost nothing to do with it.
3. Buy mindfully.
“The essence of enjoying something is paying attention, taking time to savor,” says Dr. Lyubomirsky. “Many experts will advise you to skip that pricey morning latte, for example. That’s good advice if you’re just chugging it down while rushing to work. But if you truly enjoy the experience of drinking it, then that’s a perfectly good investment of $3.”
4. Spend on others.
Humans are extremely social creatures. Researchers find that the number one predictor of happiness is having strong relationships. In studies across cultures, people who allot more money to “pro-social” spending – like gifts or good causes – tend to be happier than those who don’t. In fact, in one study, brain MRIs confirmed that even those participants who were forced to give away money felt a bump-up in mood.
5. Comparison shop sensibly.
According to economists, the folks trolling the aisles of big box stores can be roughly divided into two categories: the “maximizers” and the “satisficers.” The maximizers are the ones who, charged with buying a flat-screen TV, will read reviews of every model, spend multiple Saturdays comparing picture quality, and inevitably crave the better versions just beyond their budget. The satisficers consider a few options, then settle for what’s good enough. Guess who’s happier? Yes, the satisficers. To offset maximizer impulses, researchers suggest writing down exactly what you’re looking for and then limiting your choices (researching only items in your price range, for instance). Experts also suggest that once you possess something, you tend to bond with it. So whichever TV set you buy, chances are you’ll be thrilled with it.
6. Put off your purchases.
Remember when you were a kid and would spend the week before Christmas counting down the days? Turns out there’s science behind that anticipation: Looking forward to acquiring something has been proven to bring as much joy as actually getting it. Save up for big purchases instead of just charging them and you’ll reap this dividend with none of the interest fees.
7. Defy the Joneses.
It’s human nature to compare ourselves to people around us. And unfortunately the tendency is to see them as having more than we do. Striving to keep up is what social scientists call an extrinsic goal – motivated by the need to look better to other people and far less likely than an intrinsic goal to bring happiness. But comparing and competing are also built into our social DNA. How to resist? One way is to mingle more with those who have less. Another is to “go alternative,” as Vanderkam puts it. “Rather than compete in the same categories, recast the choice entirely.” In a neighborhood where driving the newest, most expensive car is a badge of honor, proudly drive a decade-old compact and pat yourself on the back for saving energy and not getting sucked into a fruitless competition. The point is not to feign disdain at choices you can’t afford or to accept a cheaper alternative (though those aren’t bad habits to cultivate) – it’s to genuinely examine your own values, as opposed to the Joneses’, and build your desires from there.
Use your money to make sustainable choices that lead to personal fulfillment and you’ll have the best shot at achieving a dream life you can actually afford.