When the urge to spend is too great to resist, consider spending that money on new experiences or a charitable donation.
There's no denying it: there's something that feels really good about buying the latest and most advanced tech gadget, or any consumer good that strikes our fancy.
It all boils down to a question that's been around as long as we have: Does money buy happiness?
In a sense, it's true. Money has a tendency to allow the conditions that foster happiness to flourish. The lack of money creates stress; the presence of money creates opportunity.
Yet not every wealthy person is happy. Nor is every American happy, even though relatively poor Americans are comparatively wealthy in global terms.
So, What Creates Happiness?
While it might not be possible to shop your way to enduring happiness, research has shown that people who spend money on experiences rather than goods create happiness. These experiences include things such as overseas travel, or an afternoon skydiving.
Researchers at San Francisco State University published a study showing that most people prefer spending money on material goods rather than experiences. The logic seems unassailable - experiences are fleeting, and goods last for years.
Yet this is a fundamental misjudgment. The happiness that experiences create tends to linger for long periods of time. Meanwhile, the pleasure of owning a new television or sofa tends to dissipate quickly, in terms of happiness.
Donating money, as well, has been shown to engender happiness in those who make such gifts.
So why do most people feel compelled to spend most of their money on material items rather than happiness-spreading experiences and charity? One reason is the cycle of conspicuous consumption.
What Is Conspicuous Consumption and Why is It So Potent?
The idea of conspicuous consumption has been around for more than a century. The great Norwegian economist and sociologist Thorstein Veblen coined the phrase to describe those who feel compelled to display wealth and status through the purchase of expensive items.
In other words, we're talking about people who seek status symbols. To some degree, this describes almost everyone. We have many overt and subconscious ways of signaling our level of wealth, education and status. The way we speak, the way we dress and, of course, the way we spend.
There's nothing wrong with spending money on material goods - the functioning of our consumer society depends on it. However, it's easy to fall into the trap of conspicuous consumption, particularly when we're younger. We see what our friends and neighbors have, and we desire it.
In moderation, this is a practice that isn't seriously harmful. Yet it has the potential to cause serious financial trouble if left unchecked. If you're relying on material goods to keep you happy (they won't, except in the very short-term), you can easily slip into a cycle of debt-fueled spending.
The True Pursuit of Real Happiness
Instead of chasing the fleeting happiness that comes with a retail purchase, invest your money in areas that will deliver long-term satisfaction: your career, your education or your savings account and portfolio.
When the urge to spend is too great to resist, consider spending that money on new experiences or a charitable donation.
After all, both are better at promoting long-term happiness - and both sound just as impressive as a new TV when discussed with your friends and colleagues.