At this stage in your financial journey you may have heard the quote, “Spend money on experiences, not things.”
What you may not know is that it’s not just a fun #instaquote. In fact, there’s research to back up the claim that if we’re going to spend our money, it should be on experiences.
Dr. Thomas Gilovich of Cornell University conducted a 20-year study where he found that spending money on experiences gave participants longer lasting happiness. The reason is actually quite simple. Experiences live on as memories whereas stuff loses it’s luster over time.
If I think back to my own experience, I was obsessed with my iPhone when I first got it. However, a few months down the road and I realize it’s just a phone. On the other hand, I think back to the trips I’ve taken this year and I’m filled with happy memories. I feel like my money was really well spent.
I took to my Facebook group full of blog readers and clients and asked them what they never regretted spending money on. With only a couple of exceptions, nearly everyone pointed to an experience. Here are some of the things people mentioned.
Travel is always one of the most popular answers I hear whenever I ask people about money they think was well spent. On my own blog, I once jokingly wrote, “‘I wish I’d never spent so much money on travel,’ said no one ever.”
It makes complete sense if you think about it. Traveling is usually one hell of an experience. You can explore new cultures, gain new perspectives, or just marvel at a place you’ve never been to before.
2. Adrenaline Rushes
It turns out I have two race car drivers in my Facebook group. One of them only paid to do it a couple of times whereas the other one actually considered it a hobby and participated in a few races. They happily spend the money to do this. (By the way, this is not a cheap experience or hobby.)
Additionally, some people also mentioned other activities that could induce an adrenaline rush such as sky diving or repelling off a cliff.
Granted, this may work better if you’re an adrenaline junkie (I personally don’t think I am), but I did notice a common theme that some people love to spend their money on experiences that exhilarate them.
Another thing people never regret spending their money on is convenience. For example, they have no problem paying someone else to run their errands. In fact, they happily spend this money to get the chore off their hands and therefore free up some of their time.
In some ways, this is an opportunity cost. You pay someone else to take care of something for you so that you can take advantage of the most valuable asset you have - your time.
Another example was when someone mentioned the money they spent on a Macbook. It wasn’t because it was a new tech toy per say, it was because she enjoyed working on it and knew it would last her a few years.
I can relate to this. I happily spend the dough on Apple products because they just work for my business and my life. I replaced my old one earlier this year and I know I won’t have to do that again for at least another five years.
The laptop itself has lost its luster (it’s just a computer), but the experience of working on it has not. The peace of mind that comes with knowing I won’t have to replace it again for some time also helps.
Should we be saving our money? Absolutely. But let’s be real, there are some things that are totally worth the cost. That may look like different things to different people, but it seems like experience tends to trump stuff.