Money Can Buy You All Kinds of Happiness

Forget the old saw. Money can bring you joy, and even good health. You just have to know how to spend it.

Read more from our #PERSONALFINANCE primer here.

Here are two fundamental truths: Everyone pursues happiness, and everything you own will someday gather dust.

No matter how thrilling a purchase seems the moment it becomes yours—whether it’s an exquisite OLED 55-inch TV, a new couch, even a set of wheels—eventually it will break down, become obsolete, or seem boring. You’ll likely replace it with something else that will eventually be discarded, even though most of us already have more stuff than we know what to do with. The $27 billion Americans spend every year on self storage is proof of that.

It’s the paradox of possessions, as Travis Bradberry, coauthor of Emotional Intelligence 2.0, put it. The logical assumption people make when spending their money that owning something we have coveted will bring everlasting pleasure. However this assumption, according to behavioral research, is wrong. “One of the enemies of happiness is adaptation,” said Thomas D. Gilovich, a professor of psychology at Cornell University, who’s been studying the relationship between money and happiness for more than two decades. “We buy things to make us happy, and we succeed,” he told Fast Company. “But only for a while. New things are exciting to us at first, but then we adapt to them.” And want newer, improved versions.

While accumulating stuff won’t make you unhappy, Gilovich’s research revealed this: When it comes to long-term wellbeing, spending money on an experience that creates lasting joyful memories is the better investment. Our happiness levels increase when we spend on pursuits such as travel, outdoor activities, even attending art exhibits or taking a cooking class.

A Brief Theory of Happiness

Philosophers and spiritual leaders have recommended experiences over material goods for centuries. The Greek polymath Aristotle said that people were wrong to believe that external goods are the cause of happiness, when “leisure of itself gives pleasure and happiness and enjoyment of life.” More recently, social science supports the idea that consumer goods are not related to contentment. A 1985 paper by marketing professor Russell Belk, published in the Journal of Consumer Research, found that materialistic people have a lesser sense of wellbeing than non-materialistic people.

It may seem counterintuitive that fleeting experiences would bring more lasting joy than possessions, but here’s why they do:

Experiences Become Part of Who We Are

You can really really like your stuff, explained Gilovich, but it’s not who you are. We are not our stuff. Whereas “we really are the sum total of our experiences.”

Whether exploring ancient ruins or running a marathon, experiences are usually shared with other people, which deepens our social ties—always a source of wellbeing. Anything that enriches our connections to others makes us happy. Amit Kumar, who co-authored an often quoted 2014 study with Gilovich, noted that strangers will bond over experiences more readily than over shared possessions. People who’ve hiked the same trail, for instance, or have seen the same concert believe they have more in common with one another than with someone who owns the same car or TV set. Experiences enforce our sense of identity. We’re more apt to define ourself as a reader or a surfer, not an iPhone owner.

Not only that, whether an experience is good or bad, Kumar told the Atlantic, you bond with fellow participants. Negative experiences can actually improve with memory whereas material objects can’t. A rained-out beach day can be fondly remembered as time spent among friends or family, running for cover. Conversely, you’ll never like your 55-inch TV more than the first day you own it.

Experiences Help Define Our Purpose and Passion

Spending money on experiences allows us to discover our purpose and our passions, which guide and influence us to live our best life. Only through experiencing new things do we figure out our passion for travel, our cooking skills, or facility learning a new instrument. Experiences are the means to enriching our lives, and discovering what brings us joy. They also offer excitement, challenge and inspiration. Material possessions do not.

Experiences Create Anticipation and Memories

In his 2014 study, Gilovich ran a series of surveys testing levels of happiness in different situations. He and Kumar found that when study participants looked forward to purchasing an experience, like buying ski lift passes, they were happier than normal. However, there was no change in happiness levels when they envisioned an upcoming material purchase. These results mirrored previous observations, news reports about consumers waiting in line to buy something (a new iPhone perhaps?) compared with those biding their time for an experience to start. Those waiting on material goods displayed negative behavior (in some cases, as extreme as rioting), while groups of experience seekers were more joyful, occasionally even bursting into song.

As well as creating anticipatory pleasure, experiences also live on in our minds. The happiness derived from a vacation, for example, is far from fleeting. Unless something hilarious or exceptional happens at the hardware store, it’s unlikely you’ll revisit the experience of buying kitchen tiles the way you’ll recall visiting the temples at Angkor Wat. Reliving joyful moments offers a continued source of happiness, and provides a fall back when needed to boost one’s spirits.

Loading up on material goods does nothing to change the human propensity towards unease. Our brains race with thought when left unchecked. Based on the results of a national iPhone survey, Psychologist Matthew Killingsworth says people spend 47 percent of their time thinking about something other than what they’re doing. In his research, Killingworth notes that our careening thoughts are rarely enjoyable, writing that “a human mind is a wandering mind, and a wandering mind is an unhappy mind.” He believes we can become happier by being more present in our moments, our real-time experiences that connect us to family, friends, even our community.

In fact, University of British Columbia psychologist Elizabeth Dunn says there’s another way to spend your money that will lead to even more happiness, and self-fulfillment. In her book Happy Money: The Science of Smarter Spending, Dunn endorses spending on experiences rather than things, but she adds that spending on others—whether it’s a gift for a friend or donating to a worthy cause–also makes us happy. Studies have shown that giving to charity activates the brain’s rewards center. And get this: Giving as little as $1 can make you feel wealthier. Parting with even the smallest sums increases your feeling of “subjective wealth,” meaning you feel as rich as royalty, with enough money to give away. And how rewarding an experience is that? Priceless.