As lifespans grow, financial planning can help us feel secure and relieve our stress. Although money can’t buy happiness, research shows it boosts our well-being—when we give it away, that is.
According to experts at Northeastern—one a social psychologist and the other an estate planning lawyer—that’s a useful message for anyone looking to provide for both loved ones and causes they believe in.
Studies show that “people are happier when they give money to people or causes they care about rather than spend it on themselves,” says David DeSteno, a professor of psychology affiliated with the Affective Science Institute. “Feelings range from warmth, to tranquility, to elation.” The reasons, he says, have to do with forging social bonds.
DeSteno’s own research shows giving not only increases well-being, but also encourages those receiving gifts to “pay it forward” with acts of kindness toward others. “As people gain a greater sense of affiliation with one another or an institution, they experience more support,”
DeSteno says. “That’s why giving often feels as rewarding as receiving, although we don’t expect it to.”
D’Amore-McKim School of Business assistant academic specialist Thomas Gagnon, a former estate planning attorney, has seen firsthand that “doing good brings fulfillment.” He has helped hundreds find joy by giving their assets away.
Through estate planning, Gagnon says, people can turn appreciated stock, IRAs, and real estate into income for their lifetime and then pass the remaining assets to heirs and favorite charities. One strategy, a charitable lead trust, is especially popular because it offers a tax shelter, guarantees annual gifts to a worthy institution, and passes a lump-sum, tax-free gift to heirs when the trust’s term ends.
So it seems that the old adage about money and happiness needs a little updating.