Discretionary spending is supposed to be fun. It’s the money you spend on whatever your heart desires.
But if you’re buying an expensive watch or car, don’t be surprised if you feel a little uneasy about your purchase, given that memorable experiences are considered “in” and accumulating things is “out.”
“There’s a definite cultural shift toward emphasizing experiences,” says Kate Phelan, vice president and personal trust officer at U.S. Bank Private Wealth Management.
Some studies have found that experiences leave participants happier than material goods. Yet perhaps the value of “stuff” has been dismissed too quickly. For one thing, competing studies have found no such happiness gap between material and experiential spending. And the line between possessions and experiences can be fuzzy. For example, if you buy a classic car and take an epic, cross-country road trip, then your purchase is as experiential as it is material.
One way possessions can add value to an experience-centric world is by enhancing the depth and reach of experiences. For instance, when possessions facilitate an experience.
If you’re an art collector, hosting a private gallery exhibition can create an experience that transcends your enjoyment of the art itself. Or you can take friends in your classic car to a vacation home, where you host a weekend that creates lasting memories.
“There’s the idea of blending experiences and things,” Phelan says. “It's an opportunity for you to share your interests with other people and have them connect with you in the process.”
In a more basic way, your things can enhance experiences. If you purchase an expensive camera, you’re purchasing something that can enrich other experiences, such as a trip. The camera can satisfy your desire to improve your photographic skills and take better photos while communicating the experience to others.
“It’s all about how a physical thing can make an experience richer or more personal,” says Phelan. “You’re using that camera to create a fuller depth of experience.”
Some items are more than the sum of form and function. They evoke stories. They may have a place in your personal or family history. The narrative of their origin — and the experiences they’ve helped create — become part of the thing itself.
“It's no longer just about the functionality of the device, but the story of the people behind it,” says Phelan.
That story can also include the people who make your purchases, particularly for master-crafted goods. Makers of handcrafted sailboats or Swiss watches, for instance, offer more than just a thing to purchase — they have compelling narratives around their dedication to bringing back old-world processes or emphasizing natural materials. When you buy such an item, you may also acquire the satisfaction of participating in a movement or keeping traditions alive.
Items with special personal connections have undergone a similar renaissance. This category includes family heirlooms, of course, but it also includes new purchases. For example, buying the same model of classic car that your father cherished as a way of remembering him.
“If you buy that car so you can think about him, then there’s a value to that purchase that goes beyond dollars and cents,” Phelan says. “Plus, the car becomes a part of your family history that can then be passed on to your children.”
Even though experiences may be the height of popularity, that doesn’t mean “buying experiences, not things” should be your only guide.
“Whether you’re buying an item or an experience, it’s all about making a connection,” says Phelan. The key to smart spending is understanding the connection you're trying to make.
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