Money Can Buy Happiness

As long as you are giving it to someone else, anyway - as a gift to a friend, donation to a charity, etc. - according to an article from a Harvard Business School Newsletter. The researchers asked people to spend their money in various ways and found that those who spent it on someone else reported an increased feeling of happiness.

How much money does one need to spend on someone else to notice this increase? As little as $5. Their research also showed that even when people knew about the relationship between spending money on someone else and happiness, the effects still existed.

What does this mean for personal finance? Even if you don't have a lot of extra money, it may be worthwhile to budget in the occasional gift or donation to charity. Not only will it likely make you happy, but it will probably make the recipient happy as well.

Based on my personal experience I would agree with their findings. I love giving the occasional random small unexpected gift to friends and family. It makes me feel happy, and I can tell by their reactions that it makes the recipients feel happy, too. I also enjoy participating in those volunteer/giving efforts to buy Christmas presents for needy children as well as donating to various charities including the China earthquake relief funds and Partners in Health (the latter inspired by reading the great book Mountains Beyond Mountains by Tracy Kidder).