Is why the missing centrepiece in the money / happiness debate?
Can money buy happiness is an age-old question without a satisfying conclusion. The best answer we have to this dusty philosophical conundrum is sort of but it’s complicated.
Probably the commonest answer is that greater happiness awaits when you earn above a certain threshold. A threshold of between £60,000 and £75,000 per year depending on your source.
The next wrinkle is that money can improve happiness, provided you focus on doing and not having. AKA experiencing stuff is more important than having stuff …
At Money Means, we’re forever saying that financial planning starts with the individual: who you are, where you’re at, and, crucially, your goals in life.
Cue smuggishness, then, because science just dropped a doozie …
Round 143: experience vs stuff
If contentedness is the goal, experience trumps stuff for a multitude of reasons. For one, a new TV does what your old one does … and you’ll realise that after two or three days.
Ditto a new car, ironing board or toaster. What happens once the novelty wears off? Buyer’s remorse, that’s what.
There’s actually big bags of evidence that focusing on stuff leaves a person feeling empty, while experiences are the gifts that keep giving.
Plan an event, trip or grand day out and you’ll bring anticipation to a simmer many days in advance. The experience itself will hopefully pay off, and then there’s the memories. They’ll last a lifetime.
So experience wins, but let’s not write-off the happy-joy of stuff just yet …
If it matters it matters
A study recently published in the British Journal of Social Psychology saw researchers ask 450-odd participants to gauge if and how a recent big purchase added to their happiness levels.
You’ve just read that stuff = emptiness so you’d expect this survey would reflect that …
Alas not quite. The study found that the stuff = emptiness thing plays out when purchases are related to a person’s extrinsic goals. AKA when the purchase is motivated by the pursuit of status, approval, perception and so on.
But if the purchase reflects a person’s intrinsic goals (AKA it aligns with the buyer’s values and is of particular personal importance) then, yes, greater happiness awaits.
As authors of the study note: “people associate higher wellbeing with purchases that are perceived as helping them move towards their goals.”
A tale of two Teslas
Let’s say we have two customers in the Tesla car showroom.
The first customer is motivated — whether consciously or subconsciously — by the desire to have the priciest / best car in the neighbourhood. There ain’t much happiness in his (let’s face it, his) transaction.
But the second customer collects Tesla memorabilia. He (again, it’s probably he) worships at the Church of Musk, and aspires to one day be President of the Basingstoke Tesla Owner’s Association …
The second chap is much more likely to gain lasting and measurable happiness out of his new Model Y because it speaks to a personal goal. It moves him forward … spiritually that is.
This whole revelation might seem pretty obvious, but it can inspire a simple mechanism we can all deploy to close the gap between money and happiness. Always ask why.
Money facilitates life (not the other way around)
Money is a tool. We say it all the time at Money Means but money is an important tool (albeit one laced with emotion, stress, pain, confusion et al) to help one shape, build and live a life that fits.
And that life is hyper-specific to you. There’s no one else like you out there, not really. No one else lives with your memories, experience, goals, values, hobbies and idiosyncrasies. Hence effective financial planning isn’t a cookie-cutter deal. It starts with you: where you’re at, where you’re going, and what matters to you.
So by pausing to consider your motivation behind a potential purchase, anyone can better align money behaviour and life goals. And if a purchase or financial decision moves you closer to such a goal then, yes, happiness may be part of the transaction.
So remember: wallet – check. Phone – check. Keys – check. The word why – check.
It’s another must-have on every shopping trip. A Tesla for Tesla’s sake may not a happy driver make.