Is it the love—or lack—of money that forms the root of all evil? While you deep thinkers out there ponder that one, let’s just agree that the number-one way humans keep score on the playing field of life is by measuring how well we’re doing financially—usually in relation to those closest to us; our co-workers, friends and families. These comparisons almost never make us happy, even when we’re the ones doing the best.
Over the past 20 years or so, it’s become fashionable to shun materialism, swearing allegiance instead to a host of social causes ostensibly aimed at doing some good in this world. But are we any happier for doing so? If that post-divorce Porsche put a smile on your face but fell short of filling the void inside, did trading it in for a Prius and declaring yourself a climate change warrior bring you any closer to knowing bliss?
No, this isn’t a case for resurrecting materialism. Far from it; trinkets can only ever hope to be trinkets. The questions raised are simply a nod to the fact that most of us—from all cultures and all walks of life—are doing our best in the daily pursuit of happiness. But what is happiness, and how can we hold onto that elusive feeling when it graces us with its presence?
If we loosely define happiness to mean a good life, one free of suffering and abundant in joy, prosperity and pleasure (feel free to amend this description with your own interpretation), then a question that successful entrepreneurs and business owners must inevitably ask themselves is: how do I allocate my money in way that will make me happy?
Perhaps we should let science be our guide. Because, yes, there is a science to it. And, yes, most of us have been allocating our hard earned dollars in a way that virtually guarantees our unhappiness. Most of us logically conclude, for example, that given the choice between a lasting, physical object, such as a Rolex, or a fleeting experience, such as a nice vacation, the object will make us happier over time because it will last longer.
But, no, it won’t. In fact, new research concludes the exact opposite is true.
In an interview with FastCoExist.com, Dr. Thomas Gilovich, a psychology professor at Cornell University who has been studying the question of money and happiness for 20+ years, stated, “One of the enemies of happiness is adaptation. We buy things to make us happy, and we succeed. But only for a while. New things are exciting to us at first, but then we adapt to them.”
So, while a fancy trinket will last longer, its significance in our lives—and the happiness we derive from it—will fade over time. On the other hand, one-off experiences, such as taking a nice vacation, attending Bonnaroo or learning a new skill, will create lasting memories that are likely to appreciate over time. See how that works?
According to the FastCoExist article, “Gilovich’s findings are the synthesis of psychological studies conducted by him and others into the Easterlin paradox, which found that money buys happiness, but only up to a point. How adaptation affects happiness, for instance, was measured in a study that asked people to self-report their happiness with major material and experiential purchases. Initially, their happiness with those purchases was ranked about the same. But over time, people’s satisfaction with the things they bought went down, whereas their satisfaction with experiences they spent money on went up.”
Said another way: things fade into the background; experiences become part of who we are.
Ah, but what if we wisely spent our money on what promised to be the experience of a lifetime, only to have it rain the whole time we were there, or the food was awful, or the mosquitoes ate us alive? Relax, you still made the right decision.
According to one study conducted by Gilovich, even people who reported that an experience negatively affected their happiness came around to view it more favorably after they had a chance to discuss it with others.
This phenomenon makes sense when you consider that, many times, what scares us or stresses us out in the moment becomes a funny story when we’re telling it later from a safe distance. As television personality, actor and polymath Steve Allen once put it, “Tragedy plus time equals comedy.” So, it’s not unusual for people to look back on challenging experiences as character-building exercises, or funny stories to be shared with friends.
Apart from finding joy in sharing the recollections of our experiences with others, we also take great pleasure in sharing the experiences themselves. Scuba diving along the Great Barrier Reef with a friend, for example, connects you with that person in a way that could never be diminished. Sharing ownership in a Lamborghini with that same friend, however, may provide some great thrills, but it won’t connect you with that person in a meaningful way. In fact, it may easily become a source of dissatisfaction—an obligation that binds instead of liberating you to experience lasting happiness.
Finally, it’s worth noting that we’re less likely to negatively compare our experiences than our material purchases. Experiences are largely subjective, after all. Our material objects, however, almost demand to be compared with those owned by others. The fastest car, the biggest diamond, the trendiest fashion.
As entrepreneurs and business owners, we committed to a course of action because we believed in our hearts that our big idea was worth pursuing; that if executed smartly, it would lead to a better life for ourselves and our loved ones. As we find success amid the daily chaos of running a business, let’s remember that the money we make is a tool for building happiness—and lasting happiness is what we make of it.