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Giving Makes You Happier Than Spending (Both Cost Money)
Posted By Jim On 03/25/2008 @ 1:55 pm In Personal Finance | 8 Comments
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).
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 LifeScience: http://www.livescience.com/health/080320-happiness-money.html
 Charity Navigator: http://charitynavigator.org
 Operation Smile: http://www.operationsmile.org/
Thank you for reading!