Happy Money: Principle Five – Invest in Others

“I have listened to thousands of sermons on the urgent need to give.  I find myself wondering why it is that preachers never talk about how much fun it is to give.”  Jon M. Huntsman Sr.

 

Businessman and philanthropist Jon. M. Huntsman Sr. is a world class giver.  He has given away about 1.5 billion dollars, including hundreds of millions of dollars to build and grow the Huntsman Cancer Institute in Salt Lake City, one of the nation’s top cancer treatment and research hospitals.     

Huntsman has been known to gather his executive team around him and state “Your job is to earn money faster than I can give it away.”  It has been tough for them to keep up at times. 

Huntsman loves giving and nothing has brought him more joy.  Through a lifetime of giving he has learned the value in the fifth principle of smarter spending – invest in others.    

I know what you are thinking: “If I had as much money as Jon. M. Huntsman I would have fun giving it away as well.”  But there is something else you should know about Huntsman.  He was a master giver long before he was wealthy.  Indeed, for Christmas in 1966 Huntsman spent $6,000 on a new pick-up truck that he gave to a favorite uncle who was struggling financially.  Huntsman’s salary at the time was $10,000 a year. 

So do you have to be a millionaire or billionaire philanthropist to enjoy the benefits of giving, or can giving much smaller amounts of money make you happy?  That is the question Elizabeth Dunn, Michael Norton and colleagues set out to answer. 

To do so they stopped random students on the campus of the University of British Columbia in Vancouver, Canada and asked if they would participate in an experiment.  Each student that agreed was then asked a few short questions about how happy they were and given a mysterious envelope. 

The envelopes contained either a $5 dollar bill or a $20 dollar bill and a short note.  Half of the notes instructed the students to spend the money on themselves by 5:00 p.m. that day.  The other half instructed the students to spend the money on someone else by 5:00 p.m.

That evening experiment participants received a phone call.  They were asked how they spent the money and how happy they were.  As reported in the book Happy Money, those that spent the money on others were far happier than those who spent it on themselves. 

In another interesting finding, there was no difference in happiness between those who were given $5 and those who were given $20.  Dunn and Norton reported, “How people spent the money mattered more than how much of it they got.” 

Does giving in the real world work just as well in promoting happiness as it did in this fascinating experiment?  In a survey of 600 Americans, Happy Money reports that “the amount of money they spent on themselves was unrelated to their overall happiness.  What did predict happiness?  The amount of money they gave away.  The more they invested in others, the happier they were….Amazingly, the effect of this single spending category was as large as the effect of income in predicting happiness.”

America and Canada are wealthy countries.  Does giving money away bring happiness in other countries that are not so fortunate?  Between 2006 and 2008 the Gallup World Poll conducted a survey in 136 different countries.  More than 200,000 people responded to questions about many topics. 

On the topic of giving, “in 120 out of 136 countries, people who donated to charity in the past month reported greater satisfaction with life.  This relationship emerged in poor and rich countries alike, and held up even after controlling for individuals’ income.”  In fact, donating to charity increased happiness as much as doubling income.   

The evidence is clear.  You don’t have to be a rich philanthropist to have fun giving money away.  Ordinary people giving even small amounts can get many of the same benefits.  

The Most Powerful “Happy Money” Move You Can Make

I love giving but I also like sticking to a budget.  Most of our giving is automatic and paid to institutions.  We pay tithing and other offerings to our church and have money deducted out of each pay check and donated to a United Way type of program.  These donations are part of our budget and we pay them each month.  This type of giving does an enormous amount of good and I encourage everyone to do as much of it as they can.

Our budget is fairly tight and after our budgeted giving, and all our other expenses, we generally don’t have a lot left over for spontaneous personal giving.  It is not unusual for us to run across a person or cause we would love to donate to but we just don’t feel like we can.

Several months ago we started a Micro-Philanthropy fund to solve this problem.  Each month we contribute a small amount of money to this fund and set it aside for spontaneous personal giving.  In the future when we are prompted to help someone we will have some money saved up to do so.

I am just a rookie at this type of giving but when I have done it in the past I have found that it is a lot of fun.  In fact, I believe starting a Micro-Philanthropy fund could be the single most powerful move you can make to squeeze more happiness out of your money.  The reason is because it combines four of the five principles of smarter spending into a single strategy.  Think about it for a minute.  When you establish a micro-philanthropy account you are:

• Buying Experiences – Spontaneous personal giving makes you happy because, in addition to helping others, you are buying experiences. Whether you give anonymously or openly spontaneous giving will almost surely lead to memorable experiences and great stories.  For example, read this article by Ms. Montana of “Montana Money Adventures”, a spontaneous giving pro, about some of the experiences she has had using money from her Giving Fund. 
• Making it a Treat – You can’t help everyone that needs help, but you can help some people. When you have money set aside for personal giving you can treat someone in need with some unexpected help while at the same time treating yourself to a boost of happiness.
• Paying Now, Consuming (Giving) Later – Starting a Micro-Philanthropy fund allows you to pay now and give later. The beauty of this concept is that when you are prompted to give you can do so without worrying whether or not you can afford it.  The money is already set aside just for that purpose.  You can enjoy the fun of giving without the pain of paying.
• Investing In Others – A Micro-Philanthropy account allows you to multiply your happiness by investing some of your money in others instead of in yourself.

While I can’t think of another strategy that combines as many Happy Money principles as this one, thinking about ways you can combine two or more of the principles of smarter spending into a single strategy is a potent way to increase your happiness.

The bottom line is that money can buy happiness, but only when you give some of it away.  As Dunn and Norton conclude, “If you have been focusing on trying to make more money, remember that giving some of it away can be just as rewarding as getting more of it.”

So in your quest for happiness, stop thinking of giving as an obligation.  Instead, recognize it as an incredible opportunity to help others while increasing your own happiness.  Giving is a lot of fun.  If your goal is to be happy, Invest in Others! 

 

Note: This is the sixth, and final, in a series of posts inspired by the book Happy Money: The Science of Smarter Spending by Elizabeth Dunn and Michael Norton.  The series consists of an introduction and a post about each of the book’s five principles of smarter spending.