Should I spend money on experiences or material things?

Question

Rich Dad · Accepted Answer

“If it doesn’t either grow your net worth or grow your mind, it’s just expensive entertainment.”
Let’s get something straight: the real question isn’t experiences vs. material things — it’s assets vs. liabilities. A $5,000 luxury vacation? Beautiful Instagram. Zero return. A $5,000 high-end watch? Also zero return (unless you’re flipping rare Rolexes strategically). But a $5,000 investment in a skill, network, or opportunity that increases your earning power by 20%? That’s not spending — that’s planting a money tree.
Now, I’m not anti-experience. I’m anti-mindless consumption. There’s a massive difference between backpacking through Southeast Asia for 3 months and building global connections while learning digital marketing… versus blowing $8,000 at a resort to “relax.” One expands your earning potential. The other expands your credit card balance. Same goes for material things. A $2,000 laptop that helps you start a freelance business? Asset. A $2,000 couch on financing at 18% interest? Liability wearing soft fabric.
Here’s the math nobody talks about. If you invest $10,000 at an 8% annual return starting at age 25, that’s about $100,000 by age 55 without adding another dime. Blow that $10,000 on designer bags and festival tickets every year for 10 years? That’s potentially $150,000+ in future wealth you vaporized. Compounding doesn’t care how fun your weekend was.
But I’ll say something that might surprise you: strategic experiences often outperform material things long-term. Why? Networks and perspective scale. A $3,000 industry conference could lead to a $30,000 raise. Moving to a new city could double your income trajectory. I know entrepreneurs who met their future co-founders at events that cost less than a luxury couch. Experiences that expand identity and relationships are investments in human capital — and human capital is the highest ROI asset on earth.
Material things? Most depreciate 20–50% the second you swipe the card. Cars lose about 60% of their value in five years. Electronics become outdated in three. Experiences at least compound in memory and identity — but only if they change you.
Now here’s the counterpoint: you can’t live like a monk forever. If your income is high, your assets are growing, and your investments are automated, then enjoy the penthouse suite. Wealth is meant to be experienced. But if you’re still building your financial foundation? Every dollar should either buy cash flow or capability.
So my answer: Spend aggressively on experiences that increase income, perspective, and network. Be ruthless about material junk that doesn’t produce returns.
Because at the end of the day, freedom beats furniture.
If it doesn’t grow your income, grow your network, or grow your mindset — it’s just clutter with a receipt.

Poor Dad · Answer

“Memories are wonderful, but you can’t retire on them.”
I understand the appeal of experiences — travel, concerts, adventures. They enrich your life and broaden your perspective. But before choosing experiences over material things, you need to ask a more responsible question: Can you comfortably afford either without jeopardizing your financial security? Because neither is wise if you’re carrying credit card debt at 18% interest or contributing less than 10–15% toward retirement.
Material things, while often criticized, can serve practical and long-term purposes. A reliable $15,000 used car that lasts 10 years is not frivolous — it’s transportation stability. Quality furniture that lasts 15 years may actually be cheaper per year than replacing inexpensive items every three years. Even buying a home — the ultimate “material thing” — can build equity over time. Not all physical purchases are wasteful.
As for experiences, yes, they create memories. But they are typically short-lived financially. A $7,000 two-week vacation disappears quickly. If that $7,000 were invested annually for 20 years at 7%, you’d have roughly $287,000. That could significantly strengthen your retirement or provide a safety cushion in a recession. Economic downturns happen every 7–10 years on average. When they do, the people who prioritized savings sleep better at night.
There’s also something to be said for stability. A well-furnished home, a dependable car, and proper insurance provide comfort and predictability. Constantly chasing experiences can lead to lifestyle inflation — always needing the next trip, the next thrill. That habit can delay milestones like buying a home, building an emergency fund (which should cover 3–6 months of expenses), or fully funding a pension plan.
That said, I’m not suggesting you avoid joy. Budget for experiences responsibly. If you allocate 5–10% of your income toward travel or hobbies after saving 15% for retirement and maintaining an emergency fund, then enjoy them without guilt. The key is moderation and planning. Financial stress ruins both experiences and material comforts.
My advice: prioritize long-term security first. Once your foundation is stable — steady job, no high-interest debt, retirement contributions on track — then choose experiences that fit within your means.
Because excitement fades, but bills remain.
Build your safety net first — then enjoy life from solid ground, not financial quicksand.

Should I spend money on experiences or material things?

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