Buying more stuff will never make you happy, but running a Tough Mudder might. How young adults are driving the growth of the experience-based economy.
Our generation takes a lot of flack from our elders for being lazy, coddled, entitled and (insert your derogative adjective here).
Sure, there is truth to our critics’ claims:
• No, we don’t want to give up our best years to work 80 hours a week just because “that’s always what’s been expected”
• Yes, we often prefer flexible schedules and casual work environments to more money.
• And yes, we’re actually going to use our vacation time, thank you very much.
But we’re not this way because we lack worth ethic. We are this way because we’ve gotten our priorities straight at a younger age than our parents did (if they’ve straightened them out at all).
As a workforce, millennials are demanding changes and, well, our predecessors who toiled away are jealous (as they should be).
This can be seen in our preferences for flexibility over money in the workplace, but it can also be seen in how we’re spending the money we do earn.
Increasingly, young people are spending more on experiences rather than stuff.
According to recent study by Eventbrite, more than 3 in 4 millennials (78 percent) would choose to spend money on a desirable experience or event rather than buying something desirable. And 72 percent say they’d like to increase spending on experiences rather than physical goods over the next year.
I came to the realization that it was far better to spend money on experiences than stuff a few years ago. As I was digging out of credit card debt, it was impossible to account for where that money went. Much of the stuff I had bought was already discarded (or sold on eBay in a desperate attempt to whittle away at the debt).
There were few – if any – possessions I had funded with credit that I felt good about. There was nothing I could treasure and say “yes, this makes me happy”.
But during the years I was living beyond my means, I spent money on a few things that I don’t necessarily regret. One was taking flying lessons. (If there’s an example of just how deluded and reckless with money I was, it’s probably spending $100 an hour to learn how to fly). Still, earning my pilot’s license will go down as one of the most exhilarating experiences of my life.
The others were trips to Europe, first to visit friends studying aboard in London and the second to my wife’s college roommates wedding in Sarajevo. These are trips I’ll never forget.
They are also examples of why I think it’s wise to travel while you’re young and almost any cost. You’ll never be as young and relatively free again – so find the money and go.
But my revelations, so it seems, are increasingly being supported by science.
If you’ve discovered this for yourself, the fact that buying experiences is more rewarding that buying stuff may seem obvious. But when you consider why spending money on experiences is so satisfying, it may incentivize you to put off your next shopping trick and stash the money in your vacation fund instead.
1. Anticipation (and memories) are good for us.
Most of us spend a lot of time daydreaming. And in the absence of things to look forward to, our minds tend to wander to less-than-desirable places like stress and jealousy. Anticipating things or savoring fond memories can actually make us happy well before – and long after – the actual experience.
2. We’re less likely to compare our experiences with other people than we are to compare the stuff we own.
If you want to feel bad about yourself, hang out with people who flaunt their new million-dollar house, their three luxury cars and their garage full of toys.
Even if you’re wise enough not to try to keep up with the Joneses, it’s natural to see all the stuff other people have and – at some level – feel like you’re missing out.
Your experiences, however, are yours alone. A cross-country drive with a good friend – even on a strict budget – will always be more valuable to you than somebody else’s luxury cruise around the world.
3. Even bad experiences make good stories.
If you spend your hard-earned money on an expensive piece of clothing that ends up being cheap and ripping after a few wears, you’re going to be pissed. And that’s that, the money is gone and you no longer have something to show for it.
If, however, you spend your money on a night out that ends up being a total disaster – you get soaked with rain on the way to the restaurant, your server is drunk and spills your plates in the middle of the restaurant and you find out your date is just trying to scam you – that’s a bad night, but it will likely make for an intriguing story (and hopefully a laugh or two) for years to come.
What do you think? Do you prioritize spending money on experiences? Why or why not?
By David Weliver
November 4, 2014
Posted in: Money & Your Mind
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which course of action may be appropriate for you, consult your financial advisor.
Investment advice offered through Gerber Kawasaki Inc, a registered investment advisor. Please consult your investment professional before acting on any advice.