Human beings might be clueless when it comes to predicting what purchases will make us happy, but adopting these psychologically sound spending habits will help you to spend your money both more wisely and more enjoyably:
1. Avoid the paradox of choice.
Imagine you are in the market for a new camera. You carefully research your options, reading through Consumer Reports articles and photography forums online, and you ask every amateur photographer you meet which camera they consider the best. After months of research, you finally pull the trigger on your new purchase.
At the same time, your cousin also decides to buy a new camera. He walks into the nearest camera store and asks for a recommendation from the staff for a good camera within his price range. He walks out with the same model that you bought after less than half an hour in the store.
Who do you suppose will be happier with their purchase?
Surprisingly, psychologists have found that the non-researched purchase will provide the owner with far more satisfaction than the meticulously researched one. According to Barry Schwartz, author of the book The Paradox of Choice, the reason for this has to do with the amount of anxiety you feel during your purchase. The type of person who researches every single feature of a purchase will worry, even after the sale, that there is a better option out there somewhere.
Schwartz refers to these buyers as “maximizers.” They are attempting to maximize their purchase, which seems like a good thing. However, by thinking that there is some sort of ideal version of the item out there somewhere, maximizers will second-guess their purchase and always worry that they did not get the absolute best, even when they should be enjoying their new purchase.
Their non-researching cousins, on the other hand, are called “satisficers.” Satisficers decide which features of the purchase are most important, and they stop looking as soon as they find something that meets those criteria. Because they are willing to accept “good enough,” they don’t feel the need to worry that there is a better option available somewhere. There may well be something better, but it doesn’t matter because what they bought is good enough.
It may seem counterintuitive, but it’s wiser to avoid extensive comparison-shopping of features (although comparing prices is always wise). Becoming a satisficer will help you to feel much better about your purchases.
2. Spend money on several small pleasures.
Would you prefer to go away for a full week at a spa with your best friends, or meet up with them for half-price margaritas once a week for a month?
Most people would go for the week-long spa vacation—but studies show that the weekly margarita date will actually make you happier. This is because human beings derive less happiness from things they have become accustomed to. After a day at the spa, you’re not feeling as happy as you were when you got there, and by the end of the week, you’ll be completely accustomed to the place, which means you’ll take the luxury for granted.
In addition, the specifics of taking a week off from work and traveling to your spa destination are likely to detract from the pleasure of your trip. According toPsyBlog, a site that presents scientific psychological research in layman’s terms,
“our happiness is predicted better by the details of our everyday lives than it is by our overall life circumstances. In other words happiness comes from the small pleasures in life. By the same token it’s the little hassles that are most apt to get us down.”
The details of dropping the kids off with Grandma for a week, finding the cheapest flights, and getting your work load in order will take away from the relaxation you’ll feel at the spa. The better option both price-wise and overall happiness-wise is margarita Monday.
What all this means is that you will get more pleasure out of small purchases and treats for yourself than you will by making big, special purchases.
3. Anticipation is your friend.
It turns out dear old Dad was onto something when he made you save up your allowance for the new toy you wanted. We may live in a “buy-now-pay-later” society, but that’s a great way to pay more overall and enjoy your purchases less, to boot.
When you are saving up for a coveted purchase, you are anticipating the happiness you will feel when you finally own it. While it is possible that the anticipation will provide you with too high expectations, in general it will only have the effect of helping you to enjoy your purchase more.
There are several reasons for this additional enjoyment. It is partially due to something called the Zeigarnik Effect. If we are interrupted in the middle of a task, we are more inclined to finish it. Having to wait to purchase something means that we will keep it on our minds, whereas purchasing something the moment we decide we want it means we have “completed the task” and our minds will stop thinking about it—and about the pleasure our purchase gives us.
In addition, anticipating an event plays a big role in forming memories.Psychologists have discovered that the simple act of anticipation makes the memory of the event itself much stronger and easier to recall. The implications are clear: having to save up money for a purchase will make your memory of the pleasure that much stronger, meaning you can enjoy your purchase before you make it, at the time of sale, and after you’re a proud new owner. Buying impulsively, on the other hand, only gives you a momentary high in comparison.