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Health Care
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Your Financial Life
By Transamerica / Oct 12, 2016

Spending on Experiences: Splurge or Investment?

23024_tlpbcbse1016_10_12_cathy_spending_on_experiences_ta_blog_1024x438 Imagine an unexpected inheritance comes your way.

A down payment on a new minivan or debt reduction might seem like a wise way to use the windfall, but sometimes doing the most practical thing isn’t what your family needs most.

You might be tempted to take your family on a trip to the beach, away from commutes and carpools, to celebrate your loved one and grieve together.

Here’s the surprise. Research has shown the purchases that make us happier in later years are  leisure activities, especially when it includes  social connectedness.

Researchers at the University of Michigan studied the link between what we buy and how we feel about it later by analyzing data from the University’s Health and Retirement Study of a nationally representative sample of older Americans.

They learned that of money spent on leisure, durables, charity, personal care, food, health care, vehicles, and housing, only money spent on leisure was significantly associated with happiness. They concluded the main reason for this difference was the importance of social goods and connection.

That shouldn’t suggest blowing every cent on vacations, and you should consult your financial advisor on how best to allocate your money, but what we spend on life experiences shouldn’t be seen as intrinsically wasteful. Those memory-building adventures may be one of our most valuable long-term investments.