I’ve been thinking a lot more about money and possessions lately. As I approach mid-life, in addition to trying to find my North Star, I’ve also taken on the challenge of overhauling my family’s finances.
Money Plays a Part in the Achievement of Freedom
I’ll be lying to you if I say that I’m not interested in having more money. Because the truth is, part of me is interested because I know that money plays a part in the achievement of certain freedoms. Freedom from worries about whether I can pay the bills or if I can afford to give my son a comfortable life and be able to invest in his future.
But my main reason for overhauling my family’s finances and in trying to learn more about personal finance is that I just want to be better and smarter at managing my money.
Mastering Personal Finance
I started reading more and more personal finance blogs such as Financial Samurai and Mr. Money Mustache. If I can’t find the time to read, I would listen to podcasts such as Listen Money Matters and The White Coat Investor. With the Internet, there’s so much information available right at our fingertips.
But what strikes me most about many of these personal finance experts is that many of them seem to live a modest lifestyle. Apart from talking money, they often speak about living a modest lifestyle and living within their means.
This made me think about our relationship with money and material possessions. Here are 3 lessons backed by science that could change the way you think about money and possessions.
3 Lessons Backed by Science that Could Change the Way You Think About Money and Possessions
1. The desire for money and material possessions is not good for you.
It is a common belief that money cannot buy happiness. However, this doesn’t stop some people from living beyond their means. And many people still find it difficult to save money. According to a report by The Federal Reserve System (2017), 47% of American adults are still not able to cover a $400 emergency expense.
Materialism contributes to the negative effects on your well-being of the desire for money and material possessions. According to a study (2014) by the group of Dr. Helga Dittmar, Reader in Psychology at the University of Sussex, United Kingdom:
While the desire for money and possessions is, in itself, negatively associated with well-being, the strength of this association increases when the assessment of materialism includes related concepts, such as the value placed on image and status, the beliefs that money is a sign of success and necessary for happiness, and the traits of nongenerosity and envy.
Additionally, materialism and loneliness are both part of a vicious cycle. Professor Rick Pieters from Tilburg University, The Netherlands found in his research (2013) that:
Materialism was associated with an increase in loneliness over time, and loneliness was associated with an increase in materialism over time, and this latter effect was notably stronger.
2. That good feeling that you get after buying something is temporary.
Have you ever experienced being so happy and feeling high after going on a shopping spree or after finally buying that one item that you’ve been saving for? And have you also experienced this happiness to not last as long as you expected?
Marsha Richins is a professor at the University of Missouri and is an expert in the field of materialism. According to Professor Richins, the good feeling that highly materialistic people get from a product diminishes quickly after buying (Richins 2013).
Materialistic people are those who buy more things because they believe that gaining material possessions will give them happiness.
I believe it’s possible that the excitement that you feel in anticipation of an upcoming purchase may last longer than the happiness that you get after making the actual purchase.
Professor Richins also addressed this in her study (Richins 2013). She found that the high expectations placed on products, such that it would change one’s life, is the reason for the increase in pleasure felt prior to the purchase.
3. If you want to buy something, buy experiences.
I’ve also heard time and time again from personal finance bloggers about their focus on buying experiences as opposed to buying material possessions. After reading more about this, I found that this idea also has strong scientific backing.
Elizabeth Dunn, professor at the University of British Columbia, Canada, and colleagues explored various studies on the connection between money and happiness (Dunn et al. 2011). They proposed that buying experiences would make you happier than buying material possessions.
So why will buying experiences make you more happy? According to Professor Dunn and her colleagues (2011), here are the reasons:
- Experiences helps you focus on the now so you’re able to live in the moment.
- Human beings are able to adapt to things quickly. So that beautiful designer purse or that expensive kitchen gets old to your eyes pretty quickly. Experiences are constantly changing so you are not able to adapt as quickly.
- You will most likely remember experiences more than your material possessions.
- Other people are your greatest source of happiness and you’ll tend to share your experiences with other people.
How’s your relationship with your money and material possessions?
Board of Governors of the Federal Reserve System. “Report on the Economic Well-Being of U.S. Households in 2016.” The Federal Reserve System, May 2017, https://www.federalreserve.gov/publications/files/2016-report-economic-well-being-us-households-201705.pdf.
Dittmar, Helga, Bond, Rod, Hurst, Megan, Kasser, Tim. “The Relationship Between Materialism and Personal Well-Being: A Meta-Analysis.” Journal of Personality and Social Psychology, vol. 107, 2014, pp. 879–924.
Dunn, Elizabeth W., Gilbert, Daniel T., Wilson, Timothy D. “If Money Doesn’t Make You Happy, Then You Probably Aren’t Spending It Right.” Journal of Consumer Psychology, vol. 21, 2011, pp. 115–25.
Pieters, Rik, “Bidirectional Dynamics of Materialism and Loneliness: Not Just a Vicious Cycle.” Journal of Consumer Research, vol. 40, 2013, pp. 615–631.
Richins, Marsha L. “When Wanting Is Better Than Having: Materialism, Transformation Expectations, and Product-Evoked Emotions in the Purchase Process.” Journal of Consumer Research, vol. 40, 2013, pp. 1-18.