What if you could increase your level of happiness by what you buy? You may think that is an easy question to answer by saying, “yes, if I could buy anything I wanted I would be happier.” However, what if research showed that once you obtained a certain income level, say $75,000 your level of happiness would not change that much because of what you already owned or by what you could buy?
You have likely heard the expression, spend money on experiences and not things. As more research is done on the correlation between what we buy and how happy it makes us, the data points to this statement being very factual.
I see this often as my 5 and 3-year-old children play with their toys. Within the first 30 minutes of playing with something new, they are ready to move onto something else. What is really interesting is when we are about ready to donate toys is when at least one kid suddenly takes an interest in it again. I don’t think that adults are that much different when it comes to this aspect of ownership.
There is a romance of ownership that is likely higher than actually owning the item itself. The new house, car, or clothes lose their luster sometimes within 3 to 6 months of ownership. For a new house or car that can be a very expensive feeling.
To take this spending conversation further, what if I told you that you were a millionaire but that you lived around people who had many more millions than you did. How do you believe that would affect your spending patterns and habits? In absolute terms you would be in the top 1% but in relative terms you may feel like you are in the bottom 1%. This could lead you into the classic “keeping up with the Jones’ effect”. Thus driving bad spending habits as you acquire the newest goods but become less happy in the process.
So how can we optimize our spending to help us increase our happiness?
When we mismanage our money and/or our spending patterns go awry, we can generally feel sick and broke. How you spend your money, the money you have already accumulated, and your actual health all intersect with each other. When you spend money in a way that serves the purposes that you intend it for, that can create happiness which in turn can have lasting positive health impacts not to mention financial stability.