You might have heard that studies have shown that we’re happier when we spend on experiences rather than on things. Harvard Business School professor Michael Norton is one of the pioneers of that research, and I asked him whether technology has enabled any new ways for us to “buy happiness.” The answer is a resounding yes.
Norton points to new research led by Ashley Whillans that reveals that “using money to buy time— like paying someone to clean your bathroom or for an hour of child care— reduces our feelings of time stress and allows us to spend time on the activities, and with the people, we love.”
It turns out that the trade-off we make for many on-demand products and services— money for time— is a valuable one. Having worked in Harvard’s “Happiness Lab,” I’m thrilled to know that the research backs up what I’ve found to be true in my own life. We may feel reluctant to outsource our to-do lists, but when you’re weighing how to allocate your dollars, consider investing here. As the lead researcher, Whillans, puts it, “The more stressed you feel, the less control you feel over various components of your life… Money is a tool that allows you to purchase that control.”
What to Do For Your Wallet:
Participate in on-Demand
Guess how many Americans shopped online back in 2000? Only 22 percent. As of 2016, that number had jumped to nearly 80 percent. But participation in the on-demand economy is still relatively low. For example, only 4 percent of Americans have hired someone online to do an errand for them, according to Pew research. Many more Americans are taking advantage of same- day delivery (41 percent), but they are not yet extracting the full value from on-demand’s varied offerings. Think about what additional on-demand services you could use to save time, money, and hassles in your own life. (And if you don’t live in a big city, these options are still available to you! In fact, 39 percent of on-demand consumers currently live in small towns.)
Look for cost savings in new areas of your budget
Because on- demand options are so ubiquitous, you can find a way to leverage them in just about every part of your budget. Once you have your budget in place, go through and identify places to save money and increase convenience. For example, the tried-and-true tip of cutting your cable is so much less painful thanks to the on-demand economy. Now, instead of cable versus no cable, you have the option of subscribing to streaming services like Hulu and Netflix— both more affordable than a traditional cable package. Moving from cable to streaming is such a trend there’s even a name for those who have taken this step: cord cutters. So cut the cord, and stop paying good money for entertainment you can get elsewhere at a fraction of the price.
Be thoughtful about impulse buys
On-demand apps get a high mark for convenience, but remember that these costs can add up. It’s easy to see why we’re putting a lot of our dollars here. On-demand apps give us a constant opportunity to impulse buy, just as long as we have a smartphone in hand. And with more and more companies offering same-day shipping, it’s only getting more and more tempting. Google search data reveals that more and more people— over 120 percent more between 2015 and 2017— are searching “sameday shipping” in the morning so that they can have items delivered to their doorstep by the time they get home. In 2016, researchers estimated that we collectively spend over $57 billion in the on-demand economy. Knowing that the on-demand economy isn’t going anywhere— if anything, it’s only expanding into new products and industries— we have to learn to pause and ask ourselves, “Do we really need this service or item?” There are many pros of clicking on that “confirm purchase” button— convenience, cost savings, and instant gratification. Just make sure you’re making these purchases thoughtfully and weighing them against your budget.
From Financially Forward: How to Use Today’s Digital Tools to Earn More, Save Better, and Spend Smarter by Alexa von Tobel. Copyright (c) 2019 by the author and reprinted by permission of Currency.
Follow us here and subscribe here for all the latest news on how you can keep Thriving.
Stay up to date or catch-up on all our podcasts with Arianna Huffington here.