Personal Finance 

Giving Makes You Happier Than Spending (Both Cost Money)

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An article in LifeScience says that the key to happiness is to spend your money on others. It could be charitable donations to a worthy cause of choice or it could be buying gifts for friends and family members, but the warm and fuzzies lasted much longer if you spent the money on others than if you spent it on yourself. “New research reveals that when individuals dole out money for gifts for friends or charitable donations, they get a boost in happiness while those who spend on themselves get no such cheery lift.”

One of the teams involved in the experiments theorized why this was the case and had a few decent theories. One theory, one that I thought made the most sense, was that people spend a lot of money to make their lives seem more “meaningful, significant, and important,” and that giving away money is a much more effective way of doing that. If you impact someone else’s life in a positive way, that certainly gives you more meaning, significance, and importance than you did if you spent it on yourself.

What’s funny is that I said something similar my wife while we were on our honeymoon. I mentioned that it’s much easier for me to spend money on other people, such as gifts on her (which she smiled at and then hit me), than it is to spend on myself. If I want to buy a new bicycle, for example, I’ll spend way too long researching different bicycles, comparison shopping, and price searching before I’ll pull the trigger (I’m still “researching,” it’s been nearly a year).

Part of the reason is because I want a good deal but I also have to get over the fact that I’m buying something selfish that I could save for the future, either for my retirement, my future children, etc. However, last year we donated money to charity last year in relative blink of an eye (there was some research on Charity Navigator) and I attribute that to the lack of the “selfish” hurdle (the tax deduction helps too). Of course, the happiness (and heart-wrench, if that’s a word) from receiving letters from organizations like Operation Smile (it’s a charity my mom told me about and supports) and the kids that have benefited from its work do help as well.

As an extension of this, I bet that the same happiness effect would apply if you spent time volunteering rather than working on a particular day (or weekend). It’s not as quick as spending money, but perhaps the happiness effect would be more pronounced. Either way, the lessons seems to be that if you want to make your life a little brighter for a little longer, do something philanthropic today. You can always get that bicycle tomorrow (or the next day, or the next day). 🙂

{ 8 comments, please add your thoughts now! }

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8 Responses to “Giving Makes You Happier Than Spending (Both Cost Money)”

  1. Lord says:

    Please send it all my way then. I will be most thankful and graciously accept whatever you care to bestow.

  2. emilyg says:

    I heard about this study on NPR recently and I thought it was great. The funny part, though, was that people were significantly happier after spending on others instead of themselves, but when asked separately whether people become happier from spending it on others or themselves, they all thought the answer would be themselves. So people don’t really know this about human nature…they just get warm fuzzies and forget about it later. But it’s undeniable. I definitely feel really good after buying a gift for someone or donating to a charity — much better than when I guiltily walk home from the mall with a bag of clothes I really didn’t need that badly.

  3. Jason H says:

    Spending money while spending time with friends and loved ones or giving small gifts to loved ones I’m fine with. Does it make a person happier? Sure, since you likely will receive a gift of that person’s time and perhaps a stimulating discussion.

    However, I call BS on giving to charities. I haven’t given to a human charity for nearly a decade now and I’m far from unhappy. Given that most charities waste the money on people that can resolve their issues through hard work, I find them to be a waste of time. If/when I do give, I give to animal charities, as they can’t help themselves like humans can and should.

  4. jim says:

    Jason: So you’re saying that cancer victims should resolve their issues through hard work? You’re painting with a broad brush…

    Plus, the study didn’t say that you will be unhappy if you don’t donate to charities, just that you’d likely be happier. You don’t sound that happy though… 🙂

  5. Monevator says:

    Another benefit of giving rather than spending is you don’t suffer Buyer’s Remorse. This is the well known phenomenon of buying, say, a big flat screen TV and then realising after a day that perhaps it isn’t going to improve your sex life or your kids grades at school. Receivers of gifts seldom complain to you afterwards! 🙂

  6. Jason H says:

    Jim: Actually I’m quite happy with life. And why should one donate to a cancer victim? That is exactly what insurance and debt management is for. Sorry, I don’t feel any sympathy and before you ask I lost my grandfather to cancer and have seen two friends go through breast cancer, so I don’t have my head in the sand.

  7. michael vespa says:

    If it gives people that warm and fuzzy feeling to give to a good cause how about this:
    my wife found a lump right below her breastbone 2 days before her 40th birthday ,we went to the hospital to get a x-ray ,the first thing the did was to admitt us the the 5th floor….the c ward (cancer) then came back with the bad news stage 4b thymoma no cure …we can give you chemo..but lets be honest we are not going to get a 100% remission there is too much disese too have that happen,that was best md in the field of thymomas in indiana
    now we have 2 boys 6 and13 and bills that reach over there heads so if someone want that warm fuzzy feeling I am here for ya

    michael vespa 860 490 9828

  8. Minimum Wage says:

    Spending makes me unhappy. Does this mean that giving would somehow make me less unhappy?

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