“Those who say that money can’t buy happiness aren’t doing it right.” Have you heard that joke before? Well, it turns out that there is more than a kernel of truth in there. People are generally bad at buying happiness because:
1. We buy to keep up with the Joneses / stay on the hedonic treadmill.
Heard of the hedonic treadmill? That is the phenomenon where you upgrade and the new purchase keeps you happy for a while, but its allure eventually wears off and you are right back where you started: as happy (or as unhappy) as before, perhaps dreaming of the next upgrade or new purchase. The problem with constantly one-upping is that the cycle never ends. For example, maybe we love BMWs and want to drive a 335i. We worked hard, got a promotion, or maybe came into a small inheritance. That creamy 335i coupe is in hand. Even though we may be perfectly excited and happy driving the 3-series, let’s say a new neighbor moves in and has a sleek 5-series. Wouldn’t it be nice to drive a five, we might muse (and are obviously impressed by the clever rhyme of our inner thought). Hear those rumblings of discontent? That’s the hedonic treadmill powering up again.
2. We go into consumer debt from our purchases.
Money is a big source of stress for many Americans. Most consumer debt exacts a heavy financial price – credit card interest rates often top 20%. If you just pay the minimum on credit cards for your purchase, a $100 pair of sunglasses can turn out to cost you almost double that amount. Debt eats into our future earnings – when we are still paying, at 35, for a car we bought at 29, it’s not difficult to imagine why we might be less than pleased with our 20-something-self. Even the best, most suitable purchase will be marred by the pressure of unsustainable debt. If we buy a boat because we loves sailing, but then have no way of repaying our note, we will not be enjoying the ocean view for long (because the boat will be, ahem, underwater).
3. We buy things that we know we won’t or can’t use.
Have you ever found the perfect pair of perfect stacked pumps for 80% off, and by “perfect” you mean it is half size smaller than your normal shoe size, the heel is much too high, and the color is a shade off flattering? Oh, you haven’t? Must be just me then. Despite the characteristics noted above, I bought the shoes. I wore them twice (winching with every step and feeling very uncomfortable and unhappy). Then I gave them away. Not every purchase has to be useful, but I’ve found that utility and comfort goes a long way in making me happy with what I buy.
4. We over-buy in quality or quantity.
This happens when we buy something with the intention of doing something good, but the item is never used (because it is too complicated or simply unnecessary for our purpose). Then the item only makes us feel bad about ourselves. For example, buying a new camera to improve photography skills, or buying a dutch oven to make grandma’s braised ribs. If we don’t use those items, however, the camera and the cookware will sit there, gather dust, and remind us of all the things that we have NOT accomplished. Oh, and our bank accounts will be smaller for it.
5. We second-guess our selection and imagine the superiority of that which we did not choose.
Barry Schwarz called this the paradox of choice. Instead of feeling empowered by all the options available to us, we are overwhelmed. After we make a decision (even though the outcome is good), we imagine that the choices we did not select – the roads NOT taken – are the superior path. I realize that I suffer this discontent when it comes to ordering at nice restaurants. I may think, this osso bucco is tender and juicy, and the sauteed mushrooms is excellent. But, wait, a tiny voice in my head would pop up with annoying regularity, what about that grilled seabass? Maybe that dish is EVEN better. Or how about the lobster macroni and cheese? I should be 100% enjoying my osso bucco, but I am plagued by questions of what if. What if there is something even more delicious, and I’ve just missed my chance – and have spent my dining out budget for the month!? (I… take food seriously.)
6. We tend to buy things instead of experiences.
The standard line is that experience (vacation) trumps stuff (plasma TV). This is not a hard-and-fast rule because things facilitate our experience (watching a football game with the guys on a big-screen TV), while experiences can be remembered and cherished through things (a photo album of a Paris long weekend). Generally speaking, people tend to derive greater happiness from experiences because an experience only gets better with time. Our memories smudge out the horrid long lines at the airport, and deepen the excitement of a helicopter tour. With things, the depreciation is fast and furious, and there is always the next upgrade, just around the corner. So, the average consumer will likely be happier spending $10,000 on trip instead of $10,000 on a slightly larger home. Along the same vein, I am happier spending $20 on a tango class than $20 on a new skirt.
Do you fall prey to anything in this post? What tips do you have for buying happiness?
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I actually don't really fall into many of the traps many consumers do. I do not spend much on things other than necessities, although what is a necessity to me may be an option for others…
I am the first in line to spend on experiences instead of things. I love my family vacations and just spending time with people, so that is my priority.
Great post.
I think I used to try to buy happiness much more than I do now. As I get older, my happiness comes from my ability to save money rather than spend it.
Agreed and great points. I recently stepped of the "Joneses" merry-go-round myself! I would much rather splurge on experiences rather than 'things.'
I know I def fall into the buying things I don't end up using – or don't use them like I thought I would. I love technology and all the shiny gadgetry that comes with it. That would have to be my one weakness. Coming from a financial planning background, being a prof of economics, and running my consulting practice Financially Digital I have this UNCANNY ability to rationalize things. Most of the time I'm pretty good about calling myself out but not when there's something new out there that might possibly make my life a little easier…or at least that's what the box says
I agree with most of your post. Except with the last point. Anytime I go on a trip, I always think, I really want to go on another now. lol. After awhile the memory of the trip fades, and while yes you did go on a trip, you also want to go on another trip because you want to see more of the world. or at least I do. I like spending on both stuff and experiences. I don't have a lot of stuff because I don't believe in owning an excess amount of stuff, so when I do buy something it makes me happy. Same with experiences, I don't travel a lot but when I do the trip usually makes me happy.
Number 6 is exactly why I began to blog. Great post here
I do the restaurant thing all the time…wondering if the other choice would have been better. I also hate it when an item's quality does not meet my expectations. I love experiences and that's always been a priority. I don't buy a lot but I'm often disappointed when items break long before they should. I would be a much happier consumer if things were built to last. I rarely buy ill fitting items anymore, but I still have buyer's remorse when I buy something and it breaks months later.