There is a lot of advice going around that suggests that you should spend money on experiences and not things. The idea is that material possessions will lose their luster, but experiences will give you a lifetime of memories. So, is this sound advice? In certain cases, it can be, but there are some wrong reasons for buying life experiences. Here are a few of them.
Spending is Spending
The first issue with spending money on experiences versus things, is that it is still spending. If your budget is not in order, then spending money on anything could be a bad idea. Often the advice of buying experiences and not things leave out the part about saving and investing first.
Think of it like this. If we look at two different people, one who spends all their money on cars, clothes, jewelry, and other consumables, and the other who spends all their money on vacations. Assuming both make about the same and neither have any retirement savings, then who is better off?
I’m not suggesting that everyone who buys things or experiences is living on the edge. But there is often no advice stating that you should live on a budget before buying experiences. A lot of the advice that you see simply suggests that buying experiences is a better financial strategy than buying things. This is obviously not the case.
Psychologists argue that the human psyche makes no real distinction between the emotional response of buying experiences versus buying things. You get an emotional high from pleasurable experiences the same as you do from material possessions.
Over time the emotional response that you receive diminishes if you are subject to the same stimuli repeatedly. Just like the high of having a new car fades as time goes by, so does the high you receive from eating out at the same fancy restaurant or vacationing to the same destination time and time again.
To keep up the positive feelings you will need to constantly find new places to travel to, new places to eat, and new destinations to find experiences. This behavior can be just as destructive to your budget as continuing to consume material possessions.
It can be argued that experiences are simply another form of materialism. We chase after the next amazing experience only to have it end. Then we must find a new experience to chase after. This behavior does not go unnoticed by the marketing departments of companies in the business of offering up experiences to a hungry consumer base. It is easy to get caught up in an endless cycle of spending to find the next great experience.
Buying experiences can be fulfilling. They bond people together, give us lasting memories, and can give us a sense of purpose. Just beware that there can be wrong reasons for buying life experiences. Sometimes they can be no better than buying things. You would be better served by getting your finances in order, living within your means, and then enjoying experiences that fit your life and your budget. Balance is always key.