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Here’s how to better spend your money (according to science)

We’re not that far from Christmas, the special time of the year when we part with our money. But for those interested, there is a better way.

 

 

We’re not that far removed from the most consumerist time of the year. However, according to numerous psychological studies, learning how to spend your money is far more rewarding than stacking underneath your mattress.

The following findings are from a research paper written by Elizabeth Dunn (University of British Columbia), Daniel Gilbert (Harvard University), and Timothy Wilson (University of Virginia) who dove into our culture of spending, and how we can change course, and feel better about ourselves.

 

1) Don’t buy goods, buy experiences

Think of the things we buy. The giddy experience of the day quickly washes away, and suddenly that thing we bought that golden Saturday is now a trip hazard, or worse, has slipped into the background of your loungeroom.

Experiences, on the other hand, don’t do that. They tend to live forever, forever available to bore the tits off your contemporaries when you shoehorn in that spiritual moment you had on the snowmobile in Outer Jyväskylä.

Michael Norton, an associate professor of marketing at Harvard told Big Think that: “hen we buy stuff for ourselves, we end up by ourselves with our stuff. Think of yourself on your phone playing a video game or whatever else it might be, you’re often alone with your stuff. Whereas experiences, yes, we do some experiences solo, but many, many experiences have built into them that they’re social.”

2) Buy small, buy more

Let me put it this way, the rationale “Go big or go home” is for losers. Why not indulge in something small, and then return to your couch and think about what you’ve done? The above authors believe the path to positive sensations is to purchase smaller, more frequent pleasures in lieu of grand, expensive ones.

“Thus, by treating themselves to frequent, fleeting pleasures (rather than more sporadic but prolonged experiences), consumers can capitalize (sic) on the burst of delight that accompanies the first minute of massage, the first bite of chocolate cake, and the first sight of the sea,” the study authors write.

In simpler terms, we tend to remember that day we ditched work to take ourselves to the movies than the purchase of something gaudy, because it cost us less.

 

3) Delay your gratification, padawan

According to the authors, ​anticipation is far greater payoff than possession. As the study authors put it, anticipation is basically “free happiness.” The items you purchase or receive provide a measurement of happiness, but add in some anticipation and you get to enjoy the item and the anticipation. It’s a net benefit.

The authors note studies that suggest people can enjoy the anticipation of an event, such as a trip or concert, even if the event itself is lacklustre. A potential reason for this is that anticipation is “unsullied by reality.”

 

 

Experiences, on the other hand, don’t do that. They tend to live forever, forever available to bore the tits off your contemporaries when you shoehorn in that spiritual moment you had on the snowmobile in Outer Jyväskylä.

 

 

4) Consider how future purchases will affect your daily life

We have a problem in applying abstract to the future. The further away our focus, the muddier our articulations.

Example: If you’re buying a home, thinking about the endless trips to Bunnings, or wading through paperwork and/or scrimping to save for the deposit, it may not seem worth it, and thus, will reduce your overall satisfaction.

Per the English of the paper: “On any given day, the affective experience is shaped largely by local features of one’s current situation—such as experiencing time pressure at work or having a leisurely dinner with friends…over time, psychological distress is predicted better by the hassles and ‘uplifts’ of daily life than by more major life events. This suggests that consumers who expect a single purchase to have a lasting impact on their happiness might make more realistic predictions if they simply thought about a typical day in their life.”

 

 

Example: If you’re buying a home, thinking about the endless trips to Bunnings, or wading through paperwork and/or scrimping to save for the deposit, it may not seem worth it, and thus, will reduce your overall satisfaction.

 

5) Beware comparison shopping

On the surface, it sounds like a positive. You find the item, then find the best price for the item. Right?

Nah.

Big Think put it thusly: “Comparison shopping sabotages our happiness by subtly shifting our attention. When we engage, we don’t look for the features and attributes that would make us happy; instead, we focus on the differences in the available options. As a result, we buy more than we need or select for the best deal — not the item that we want or that better fits our circumstances.”

Further that point, the more choices we have to compare, the less happy we are with our choice. Take Netflix for example. All that cycling and you settle on not what you wanted, but the first eight minutes of three movies you didn’t.

 

 

 

 

 

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