Expecting a big tax return this year? If so, what are you planning on spending it on? A new TV? The latest smartphone? You might want to hold off.
According to an article on Fast Company’s Co.Exist by Jay Cassano, there have been several studies that show that people who spend their money on experiences rather than material things are generally happier. Though buying shiny new things might make you happy at the moment of purchase, that happiness soon wears off. On the other hand, experiences such as travel, attending a concert, or taking a class to learn a new skill will result in increasing happiness for the participant, even after the actual experience is over.
In the article, Cassano quotes Dr. Thomas Gilovich who has been studying the effects of money vs. happiness for over 20 years. “Our experiences are a bigger part of ourselves than our material goods,” says Gilovich. “You can really like your material stuff. You can even think that part of your identity is connected to those things, but nonetheless, they remain separate from you. In contrast, your experiences really are part of you. We are the sum total of our experiences.”
Another reason why spending money on experiences like travel makes sense is that it creates a shared experience with not only whoever you were traveling with, but you also create a sense of connection with other people that have visited the same destinations as you.
For example, let’s say you’re at a party and meet a new person. If you both have a shared experience of hiking the Inca Trail, you most likely will feel a bond form (though it may be small) because of your shared experience. Telling your story and reliving the memory of that trip causes you to feel a sense of happiness all over again.
“We consume experiences directly with other people,” says Gilovich. “And after they’re gone, they’re part of the stories that we tell to one another.”
So let me ask the question again, how will you spend your tax return this year?