How do you spend your money ?

November 17, 2018

Imagine you got a couple of lakhs of rupees in a lottery. Now ask yourself how you are going to spend it? Of course, I am not imagining that you have an equivalent debt and you are going to repay it.  Let’s assume for a moment that you have no such thing and you are going to spend the entire amount on yourself.  Now the question is on what you will be spending?   A brand new modern car? ( replacing an old one perhaps ) , Gold?  Home? A  couple of foreign tours?  Some high-end electronic gadgets? This list can go on and on.  This world has plenty to offer.  As we observe this list, there is a pattern when it comes to purchases or spending money not only from the lottery but in everyday life. There is one area people to tend to differ.  Do you want to buy more experiences or more things?   This is an interesting area of research in behavioural economics.  In his beautiful analysis of this choice exercised by human beings (link below) James Hamblin takes us on a tour of this dilemma of man. Of course, it’s not that someone is spending entirely on possessions while others entirely on experiences. On the other hand, what we see is a different tendency among people towards their purchase preferences.  

A lot of researches conclude that purchase of experiences brings more joy to people than things.  Having said this, we must always remember that the tendency to amass things,  to possess, to own is very much a  human instinct.  Elias Canetti says,

seizing and incorporating…There is nothing about us which is more strongly primitive…( Crowds &Power)

So we have a natural tendency to possess things.    When we say experiential purchases may bring more happiness, what exactly we mean?  Happiness is not confined to the moment we get something but the waiting for it also.   Hamblin asks us to compare the waiting for a vacation to an exotic place and waiting for a brand new i phone or a similar high prized gadget or any other item. If it’s a joyous anticipation in the first case, its an impatient waiting in the second case . Or take another difference.  In case of an experience, the happiness element does not stop once the event is over. It continues and perhaps become much sweeter as time passes by.  I am sure that many of you will be having your memories from a school trip even though you would have forgotten many other things from that age.  Not only school trips, we seldom forget trips.  Recalling sweet experiences always fill us with joy.   However most possessions lose their charm once you get it and as time pass, it decreases.     As  Hamblin says,

in case of an experience ,   even a bad one is a good story.

Researches have also found that when it comes to buying experiences and spending for that, people compare less with others as compared to material things.  Perhaps your financial status does not prevent you from deriving an immense pleasure from a trip or concert or a book as compared to certain material possessions which are entirely dependent upon your capacity to buy. In other words, you need not be the rich guy to enjoy the best of a  book or a movie or a  concert.  The ability to enjoy these depend on the tastes you develop and once you experience it, your obsession for happiness from materials things may come down also.

It will be interesting to observe that in our country people are yet to invest heavily in experiences.  Of course, now people travel more and indulge more in leisure.  However, we will find millionaires around us who never stepped outside their surroundings.  At the end of the day what matters is how intelligently you are blending both. How you allocate your resources between a right mix of possessions and experiences.   Are you prepared to junk some of your material crazes for gathering more stories and memories and live in anticipation as  Hamblin says?  Are you crazy to own everything at the cost of everything else in life? Are you a person who considers the money used for experiences is a waste? Which gets you more joy,  buying gold or plane tickets for a great journey? Perhaps its time we own more experiences and fewer things.

Those who want to heed Hamblin’s advice in full and ready to gather experiences for a lifetime, read on…..


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