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Wealth & Well-Being

Study Finds True Happiness Comes from Giving, Not Receiving

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More money, more happiness? Or more money, more problems? It’s all in the eye of the beholder.

While much research has been done studying the link between income and happiness, less has been done on the link between happiness, income, and how income is spent. But a study performed by the Association for Psychological Science suggests this is exactly where we should look.

“It's Better to Give Than to Receive.”

We’ve heard it a million times, especially around the holidays. But, according to this study, there is a scientific basis behind the saying. People actually report higher levels of sustained happiness when spending on others than when spending on themselves.  

Typically, what happens with happiness is that it fades the more times a happy event occurs. The scientific label for that phenomenon is "hedonic adaptation." But hedonic adaption doesn't hold true for the happiness we feel when giving to others. The happiness level is both higher and more sustainable amongst people who give. 

Higher sense of happiness? And more sustainable? Sounds too good to be true. But according to science, givers really are onto something.

Unlike the diminishing happiness we feel when we receive gifts, the joy of giving keeps us feeling happier for longer. 

How do we know? The finding was based on a test in which 96 participants were given $5 gift cards each day for five days. The participants were told they could spend the money on themselves or give it to charities or tip jars. Asked to reflect on their choices, the people who spent the money on themselves said they felt happy initially but less so over the course of the five days. Those who gave the money away said their happiness level increased with each gift. 

Could giving be the compound interest for happiness?

What's Your Happiness?

We have found that so much depends on how you define 'happiness' and the role that money plays in your life. For many people, happiness is a comparison game. They think they are happy if they have what others have. To them, status achievement is the measure of happiness. At the extreme end, you will find people who spend money they don't have to buy things they don't really need to impress people they might not even like.

For others, happiness is defined more by the positive feelings they have about themselves, which may have little to do with money. The same research found that people who contribute a more significant portion of their income to others are happier than those who spend it on themselves. For many people, money can actually get in the way of the positive feelings they yearn for. At the extreme end of this group are the rare people who might even be willing to endure poverty if it would generate more positive feelings.

The Risk of "More"

Society has conditioned us throughout our lives to strive ever-upward in pursuit of more. It's the sole objective of advertisers to make us believe that our lives will be better if we own their products. And, as is fairly typical in our western culture, many people tend to measure their own lifestyle based mainly on a comparison with others rather than criteria rooted in personal beliefs and values. 

Unfortunately, in the pursuit of more, people lose sight of what they already have, which is really the only proof of what they can reasonably expect to produce, both now and in the future. The failure to appreciate the lifestyle we have increases the" risk of more" with absolutely no guarantee of increased happiness. 

What's the Color of Your Money?

Money in and of itself is not the root of evil; instead, it is the love of money that can skew a person's sense of happiness. When placed in the proper perspective, money can be an enabler of happiness when it allows people to be themselves and focus on the essential things in life. The key is to treat money as it was intended, as a tool to achieve your goals and build the life you envision. When money becomes the goal, true happiness may become elusive.  

At Northstar Financial Planning, we believe that money is a tool. A tool that is most helpful when put toward the things and people in your life that bring you the most fulfillment. For some, funding their grandchild’s 529 plan may bring them the most joy, while for others, it could be taking trips together or starting a business to someday pass down to heirs. There is no right or wrong answer. How do you prioritize your spending to contribute to your happiness? 


Written by Alexa Darbe in collaboration with Lexicon Content Development

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