Can money buy you happiness?

Why does purchasing an experience have a greater impact on our happiness than purchasing material goods? Experiences create memories to reflect on, long after they have passed.

What is value for money?

When we think of value for our money, it makes sense to think of something that will last a long time. But is happiness a lasting effect of buying material goods?

In a 2014 study by San Francisco State University, Professor Howell found that spenders often feel a happiness boost from buying a material item, however this feeling soon disappears.

On the other hand, if they purchased an experience, such as a trip away, concert tickets or dinner with friends, they were happier for longer.

The power of experience

Why does purchasing an experience have a greater impact on our happiness than purchasing material goods? Some reasons could be:

• They are fleeting and we don’t take them for granted.
• There is often a delayed gratification between the purchase and an experience.
• Experiences create memories to reflect on, long after they have passed.
• We often share experiences with other people. This allows us to develop human connections and bond through shared memories.
• It's easy to compare our material goods against what others have, and find ourselves lacking, but much harder to do this with an experience.

The gift of giving

There's one way to make sure your material purchases make you feel good - money spent on others can make you happier than money spent on yourself.

So next time you feel like buying yourself a new shirt or a few magazines, try to imagine that 'buzz' that comes with giving someone a gift, or donating to a charity in need. You might just change your mind on what you're about to purchase - or who you're purchasing it for.

The urge to splurge

There will be times when buying something makes your life easier, and makes you that little bit happier.

It’s a good idea to reward yourself once in a while, budget permitting. However, try to limit your splurges and always spend money consciously. After all, you could be happier saving for that dream holiday instead.

Have trouble saving for great experiences? You might want to consider opening a savings account or linking Pay&Save to your &Transaction account - so you can save money every time you spend.