Using Common Cents

Make yourself happier by turning your money into memories.

Money doesn’t buy happiness. But what you do with your money can make you happier.

Researchers have long been aware of the different levels of happiness brought on by spending money on experiences versus material objects. In a 2010 Cornell study, people who spent money on experiences were more pleased initially and became even happier over time. In contrast, those who spent money on “stuff,” or material goods, often had more negative feelings toward their purchase—they worried they hadn’t gotten a good deal, were unsure if they’d gotten the right item and fell into the trap of comparing what they’d bought to the Joneses.

According to Thomas Gilovich, Ph.D., a Cornell professor of psychology, experiences “tend to be experienced, remembered and evaluated more on their own terms, and less in terms of how they compare to alternative experiences.” They become a piece of us, something entirely personal, unlike the objects surrounding us. Going to a baseball game is better for happiness than even getting a signed ball. An event doesn’t decrease in value over time or wear out. Instead, the happiness we get from it grows in our memory.

Happiness That Lasts

In their September 2014 study, Waiting for Merlot, published in Psychological Science, Thomas and Amit Kumar, a Ph.D. candidate at the university, went a step further. They wanted to see how we can derive even more happiness from our experiences. What they found was that “experiences are kind of rewarding in anticipation as well,” even when you are standing in line. For example, if you’re waiting for symphony tickets, you and the others in line are in a fairly positive state of mind. On the other hand, waiting to buy tangible goods has a whole different vibe—think crowds on Black Friday, full of competition rather than camaraderie.

The period of anticipation is exciting when you are involved with buying an experience, no matter if the purchase is big or small. We actually want to delay consumption of experiential purchases. “Waiting is part of the fun for experiences,” Amit says. Even making dinner reservations can help you anticipate the meal to come, stretching out the exhilaration of the experience. Sharing the trip or dinner with a loved one gives you opportunities to talk about it in the future, strengthening your bond.

Choosing Wisely

Of course, we can’t spend all of our money doing things; we still have to buy groceries. But, what we can do is “tilt spending a bit more in the direction of experiences,” Amit says. When that tax refund check comes, instead of heading to the mall, consider planning a trip. Because even once your cash is gone, every time you talk about your trip, you’ll get another jolt of happiness. Talk about money well spent!