There’s a standard psychological mistake people can make when wondering how to spend their hard-earned cash.
Here are a few examples, see if you can spot the pattern:
- A camping holiday seems like fun when you abstractly imagine escaping the rat-race and getting back to nature. It doesn’t seem so much fun when you’re stuck in a cold, wet field, desperate for a proper hot meal.
- A big, expensive DSLR seems like a good idea when you think about the amazing high-res photos you’ll be able to take. But it turns out you can’t be bothered to carry a big, heavy camera around all the time, so in reality it doesn’t get used much.
- You imagine that buying a wreck of a house and doing it up means you can realise your perfect lifestyle vision. When you move in and start work, all you really want is to get rid of the dust and mess and have a normal life: your vision is forgotten.
The answer is that we tend to think abstractly about our potential purchases. The further off in time and space they are, the more abstractly we think about them.
Buy smart by thinking concrete
One of the problems of thinking abstractly about our purchases is that we tend to forget about the gritty details. And it’s the details that have a frighteningly high capacity to make us happy (or unhappy).
We know this because research finds that our happiness is predicted better by the details of our everyday lives than it is by our overall life circumstances (see Kahneman et al. 2004 and Kanner et al., 1981).
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. Exactly the same is true in the workplace where little hassles are a hefty predictor of job satisfaction (see: 10 Psychological Keys to Job Satisfaction).
Unfortunately when we plan our purchases we tend to make the mistake of thinking in the abstract and forgetting about the day-to-day details.
To make purchases that will give us the most happiness (and avoid buyer’s remorse) we need to think as concretely as possible. It might not sound as fun, but thinking about how we’re going to use the item or service on a daily basis is more likely to guide us towards the choice that will make us the happiest.
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How to Spend Wisely
→ This post is part of a series on how to spend wisely: