We often hear that money can’t buy happiness. But is it actually true? There is, in fact, research suggesting that experiences, time spent with people we love, and memories of special events can make us significantly happier.
CARL RICHARDS is a strong advocate of spending on experiences. Faced with a choice between spending money on experiences or on physical items that you don’t actually need, he suggests you should almost always opt for the former.
TEBI: Give an example from your own life of when you’ve invested in an experience. What thought processes were you going through?
CR: I’m a huge believer in the value of experience over “stuff”. I remember the experiences I have with the people I love.
We particularly like outdoor adventures, but it could be art or whatever is your thing. For us, it’s outdoor adventures, and one example is a holiday we had when we lived in New Zealand. The whole plan of going to New Zealand, in fact, was to have a giant experience for the family.
Two Christmases ago we decided to go on a pack rafting trip. Each person on the trip has their own inflatable raft. You hike around carrying your raft and paddle, and when you come to a river, you inflate the raft, you float down the river, and then you hike to the next one.
We did a five-day loop in the Fiordland region of New Zealand — just me and my wife and our four kids.
At one point, we were four-and-a-half days from the nearest road. We were out there, on pack rafts. I get emotional talking about it. Those memories are unbelievably valuable. Our kids will remember that forever.
Planning for it was hard. I was taking my kids four-and-a-half days from the nearest road! There’s a bunch of stuff that could go wrong, and I had to think through all of that. The logistics of it was hard.
To prepare for it we took a four-month kayaking class as a family to get used to being on the water. Those kayaking classes together were experiences too.
From a happiness point of view, why are experiences like that so positive?
The research is clear on this — spending on experiences is more valuable than spending on stuff. And a huge amount of the value of the experience comes beforehand, in the anticipation.
Some people love surprises, but they’re the outliers. Most people enjoy the period before the experience even happens — the prep, the thinking, “Oh we’re going to Disneyland next week,” and all of that.
There’s also data around peak experiences and last experiences. What you remember most about a trip is the peak experience and the last experience. That’s what you remember.
So, as an experience organiser, think about enjoying the anticipation of it. Perhaps watch a video about what you’re going to do, or talk to somebody about it. Think about what the peak of the experience could be, and think carefully about the end of the experience. Often the final memory is you fighting on the aeroplane on the way home. So think about that.
If we focus on those things, experiences can become so valuable.
What is it about things, i.e. physical items, that seem to promise a great deal but actually deliver rather less?
We are somehow — I don’t know if addicted is the right word — but we’re somehow lured into this promise that stuff will bring happiness. “If I could just get that, I’ll be happy.” The academic name for that is the hedonic treadmill.
Everybody knows this. A week after buying the new car, sometimes on the way home in the new car, you’re thinking, “Oh man, this is amazing, but won’t it be cool when the next model comes out.”
The iPhone is a great example. As soon as you get the new one, you’re thinking about the next one.
Those things fade, we know it. So if we know it, we need to opt out of that system. It’s really hard because it’s the water we swim in. You can’t go anywhere without being bombarded with the message, “If you buy this, you will be happy.” But we know it’s not true!
So we just have to be aware of our decisions, systematically, and opt out of it.
One of things I like to say (and it’s especially helpful with the kids) is, “I’m not buying that because I choose to spend my money elsewhere.”
I could be choosing to spend my money on something that’s going to happen 20 years now — call it a long-term investment. I could also be choosing to spend my money on an experience.
But it’s not about constraining or denying myself something. So I might say, “I’m going to buy this tennis racket because it’s going to allow my wife and me to play tennis twice a week.”
It’s about making a different type of choice — one that’s more aligned and more aware.
For someone who’s battling between spending money on a new phone and a long weekend away with their partner or the family, what would you say to help them come to a decision?
If I were trying to make a decision between buying the latest whatever and some amazing experience, this is what I would do.
Step one would be be to realise that this is a trade-off. It’s funny, but we do this little trick where we aren’t planning on spending money and suddenly we’re tempted to buy something for, say, £500. When we don’t buy it, we think we just saved £500. So we just spend £500 on something else instead. Don’t do that!
So the first thing is to be aware of the trade-off you’re making. Let me give you an example. I had a client once who said the most important thing to him was to spend more time with his family and, as an example, he said he would love to coach his daughter’s football team. The problem was, he just didn’t have time.
So we wrote it down: “Would love to spend more time with family. To coach daughter’s football team would be amazing, but no time.”
Why did he have no time? Because of his long working hours.
This client had a boring car — let’s call it a Toyota Camry — but it was paid off. He said wanted to lease the new Tesla once he’d sold the Camry.
So we had this conversation. “No judgement from me,” I said, “but let me just reflect what you said. You said you’d like to coach your daughter’s football team. How many shifts could you drop if you just drove the Camry and you didn’t lease the car?”
Maybe your values are different. Maybe the Tesla is more important than managing your daughter’s football team. Just recognise you’re making that trade-off, and as soon as you do that, it becomes much clearer and easier. So you say, “Am I going to buy the phone over taking my family on holiday? No way.”
Also in this series:
The key to controlling our spending
Don’t judge people based on money
WHAT NEXT?
If you found this article interesting, you’ll probably enjoy these as well:
Four financial priorities for young adults
Good investing is like good winemaking
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