It’s important to make room in your budget for “fun” stuff. Budgets without room for things like going to see a movie, buying a pair of shoes, or going on vacation are more likely to fail. So what should that "fun" money be prioritized toward for the greatest impact? Experiences or things?
According to an article from SAGE Journals, experiential purchases (money spent on doing) tend to provide more enduring happiness than material purchases (money spent on having).
The wait for an event, such as a vacation or concert, brings more happiness than the wait before purchasing something.
While there's that initial 'rush' you feel when you buy something new, it's not something you can necessarily recall as 'happy memory.' You quickly become accustomed to that item being in your possession. These new purchases also lead to people needing to keep buying 'bigger & better' to keep that feeling.
Every time you have a new experience, such as a vacation, it becomes a part of who you are. That doesn't happen with our material possessions. You can recall the happy memories and remember what that felt like, that doesn't happen when you buy something.
It can also help eliminate the need to 'keep up with the Joneses.' People aren't as likely to compare what they do as they do with what they have. While you can easily compare an item such as car, it's impossible to compare the feelings that experiences can bring.
So while you may not be able to have it all, you can make sure that your money is going towards what's most important. Just remember to leave room for fun whenever you create a budget.