Real Life Example: As my dad grew older, his life grew simpler, and he would often talk about how “cheap” he was. But was he?
In the 70s and 80s, he went through two Porsches and a Mercedes. He would (arrogantly?) leave the keys in the car when it was parked. In the 2000s, he drove small, thrasher SUVs and I think the keys spent more time in his pockets.
He went through a few extravagant homes in expensive neighborhoods before migrating to simpler homes in more remote locations.
His work also changed. High-profile, high-ego, high-travel jobs evolved into simply doing good work, locally, with a reasonable schedule. (That’s not about stuff, but the trendline is related).
I think he figured out over the years that experience matters more than stuff. And it does. We know it intuitively, there’s research behind it, but do we live it? How can we learn to live it sooner?
Carl Richards is brilliant at summarizing how we respond to money in napkin sketches. That’s his sketch at the top of this post.
I think most people look at this sketch and think, “Well, yes, of course.” It’s a natural response, perhaps it feels intuitively obvious. If that’s you, have you ever thought about whether your spending actually matches this principle? If you look at your last three credit card statements, how much money did you spend on experiences, how much for stuff?
There’s ample longitudinal research on this topic. The first chapter of Happy Money steps through study after study that conclude that happiness is driven more by experience than stuff.
You can reproduce one of the experiments from Cornell right now:
- Think of four material purchases you’ve made
- Think of four experiential purchases you’ve made
- Grab a piece of paper and draw a circle in the middle to represent your self
- Now draw circles for each of those eight purchases to indicate how closely linked each purchase is to your sense of self.
Which purchases are more closely related to your sense of self?
How to Live It
In my twenties when I first had a paycheck, I didn’t understand any of this. I jokingly refer to a couple years during this time when I consistently spent more on compact discs (dating myself) every month than I spent on rent; the unfunny part of the joke is that it was true. I love music, so there was an experience element, but the stuff quotient was pretty high in those days.
So here’s a self-diversion tactic to check yourself: just ask yourself one question before you push the proverbial “Buy Now” button: What happens if I forego that purchase for a week or a month? Will it matter? This is a great budgeting technique, but it’s also a great way to apply the marshmallow test to your purchases.
Is Your Stuff Actually Experience?
Back to my dad to close this out. He wasn’t actually cheap. He was focused. His biggest purchases were stuff that enabled experience. He had a nice boat, and boats are certainly not cheap – to buy or maintain. But it wasn’t about the boat. It was about being on the water, about fishing, about time on the water, about time alone or with friends and family. The fancy cars of his earlier years bought him none of that, the boat bought him all of that.
If you have a real-life question you’d like me to write about, let me know: firstname.lastname@example.org.