After a little break, here is the fifth article in my series on how to change your spending for more happiness in your life. All of these articles have been based on the book, Happy Money: The Science of Smarter Spending by Elizabeth Dunn & Michael Norton.
The previous four sections were:
The fifth section “Invest in Others” focuses on the benefits and reasons why to spend money on others. Until now, the previous articles all focused on how to spend money on yourself. Believe it or not, spending money on others can increase your happiness MORE than spending it on yourself. What is your first reaction to this?
To me, this concept seems obvious. We are taught and know that we should share with others and help others, yet many of us don’t actually give much money to others. We honestly think “treating ourselves” will feel much better and increase our happiness more than giving it away or using it for someone else. But the science does not support this.
The book presents an experiment where people were given money and asked to either spend it on themselves or spend it on someone else (including a cause) by the end of the day. They tracked the participants’ happiness. The study found that spending money on someone else increased people’s happiness. The other interesting find was that the amount of money ($5 versus $20) did not make a difference.
Their research also showed that the amount of money people give away as a ratio of their income did correlate to their happiness and overall life satisfaction. These results held around the world, even with people in extreme poverty. Those who had less to give often gave in more extreme and lifesaving situations than those in more prosperous countries yet the happiness increase was the same.
The research shows that the nature of the giving situation matters. They found the following three strategies helped increase the happiness boost and impact of investing in others:
- Make it a Choice
- Make a Connection
- Make an Impact
Make it a Choice – The reward centers of the brain were more greatly activated when people choose where and how much to give, rather than it being an obligation. When asking for money it helps if you give people the choice or option to give, then they felt significantly happier when they did give.
Make a Connection – Giving to those closest to us is more the norm. I know I give gifts to family and friends. I give money to charities and have been making more of an effort to do this in the past couple of years, but to be honest, I don’t feel as good about the money I give to charities as I do about the gifts I give to people I know. I assume this is because I don’t feel really connected to the charities and the people who benefit from the money that we give. I don’t know these people directly so it still feels distant and removed from me. I know I could have a bigger happiness boost for this giving if there was a stronger connection with the people and organizations.
Make an Impact – Being able to see and know the specific difference that your contribution(s) make increases happiness much more. Organizations often try to tell the stories of those they help and the more real and specific the details of the impact, the more meaning and better it feels for the giver.
These are important factors to keep in mind when you do choose to give AND when you are asking for donations to help others.
The research shows that giving and happiness support and reinforce each other. The more we give, the happier we feel and then we want to keep giving. The studies showed that if they had participants remember a time they gave, they then often chose to give again. Sometimes we need the reminders.
This section of the Happy Money book talks about how giving money away actually has a triple effect. It makes you:
- Physically healthier
- Feel happier
- Actually feel wealthier
Giving money away makes you physically healthier with the positive hormones and chemicals produced in our bodies from these acts of generosity, which is related to feeling happier and lowering stress.
Also, similar to how giving time away makes you feel like you have more time, the same is true with money. People who give money away feel wealthier even when controlling for how much money they make.
One last comment on this topic. It is possible to give too much money away. You do not want to put your own financial security at risk or go into debt while giving away money to others. This article and the book is not encouraging you to give ALL your money away. Yet I also believe that many of us could make some meaningful and happiness boosting small changes in our spending by giving more to others and causes that we feel strongly about.
I recommend that you be more conscious of where and how you spend your money and to think of giving and investing in others as a meaningful and happiness building part of our financial picture.
Be intentional. What can you do now to help invest in others? Please realize you can be creative and find ways of giving that feel good to you and help others.
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