Could the Secret to Happiness Be in Your Wallet?

Why giving increases happiness, and how to budget for it.

Written by Shannon Marie  |  on


Raise your hand if you’ve been scoping out Black Friday and Cyber Monday deals in anticipation of post-turkey purchases. I know I have. It’s hard not to with ads for all of your favorite products following you around the internet. And it’s offline, too, with sale signs, coupons and holiday music in full force.

Being a YNABer offers some immunity, but if you’ve got any wiggle room in your budget (and I hope you do!), the temptation to shop and WAM is palpable. This year, I’ve been particularly caught up in holiday sales buzz, until this morning …

There I was, gawking at Amazon when my dad called. He wanted to know if I’d join him and my mom, tomorrow, for a Thanksgiving meal, plus a movie. He offered to buy my ticket to Creed II (a movie that I’m still shocked my mother picked!). His kind gesture inspired me, so I called my mom and asked if I could bring a side—perhaps the cranberry sauce—to make lighter work of the meal.

It was that act, just offering to bring a dish, that sort of broke my Black Friday trance …

Giving: The Happiness Elixir

Suddenly, I was not-at-all worried about the house plants, skateboard and bluetooth speaker that’ve been calling my name over the last week. Instead, I was excited about purchasing cranberries, an orange and possibly a zester so that I could bring something to share with my parents tomorrow.

… and I felt better—thinking about bringing a dish really lifted my mood. Buying stuff for myself is fun, for sure, but the happiness I felt about bringing cranberry sauce to share with my family felt a lot more potent. Unreasonably, so, in fact.

And science says that it is! In a study published last year, researchers found a link between generosity and happiness: Two groups participated in the study. The first group was given about $25 per week to spend on themselves, and the second group was given the same amount, except they were instructed to spend the money on others. The researchers analyzed the brain activity of the participants using functional magnetic resonance imaging (fMRI) and found that the areas of the brain associated with happiness were more engaged for those who spent the money on others.

In fact, simply promising to give to others was enough to trigger happiness in the brain, though not as much as when you actually follow through. And, of course, this got me thinking about budgeting …

The Art (And Science!) of
Staying Happy on a Budget

Sometimes, for me at least, I look at my finances and get overwhelmed by where I’d like to be in relation to where I am. My budget helps alleviate a lot of my worries, but it’s only natural to get caught up in fear from time to time. And it’s also easy to get frustrated by how my tastes and preferences far outpace the current reality of my bank balance. I’m sure a lot of people can relate.

But, what if we took a cue from the happiness study and, instead of focusing our attention on what we don’t have, we shifted our attention to what we do have—what we’re grateful for—and ask, “What can I give?”

Doing so would give you a scientifically-proven happiness boost. Your recipient would benefit from your generosity. Win-win. But, even cooler, when you’re happy, you don’t need to spend to fill a void. Retail therapy isn’t necessary, and it’s easier to assess temptations and choose “no.”

Priorities fall into place, and you might even spend less overall because you’re more mindful about what you really want. Would I love some cute house plants? Yes. But, if I’m really being honest, will plants dramatically affect my daily happiness? Not really … not like a memory of preparing and sharing a special cranberry sauce recipe with my family would. And, I suspect that’s where the magic of generosity lies: in the connection you make with others.

So, where would you like to connect? Whether giving to a friend or a special cause, there’s one surefire way to make it happen …

Plan Your Giving with Goals

Your holiday homework, should you choose to accept it, is to set a giving goal in YNAB.

Let’s say you want to donate $500 per year to your local animal shelter. The first thing you need to do is to create a budget category for your new goal. When you click on the category name, you’ll see “Create a goal” in YNAB’s inspector (at the bottom of the right-hand pane).

You’ll see that there are three types of goals:

  • Target Category Balance – Use this to save a set amount for one-off goals.
  • Target Category Balance by Date – Use this to save a set amount by a certain date for one-off goals.
  • Monthly Funding Goal – Use this to set aside a certain amount each month for your goal.

For this example, we’ll select “Target Category Balance by Date” because the goal is to save $500 by December 31st. Enter the information and click “OK.”

Now your category’s “Available” column is orange, which indicates that you haven’t set aside enough dollars to meet your goal, yet.

A glimpse at the inspector shows you how much you need to set aside each month to fulfill your goal. Since there are only two more months left, this year, you’d need to set aside $250 each month in order to have the $500 by December 31st. (Planning ahead really is everything! Ideally, you’d start your goal well in advance. If you do this in January, you’d only need to budget $41.67 per month to meet your goal.)

If you add $250 to your animal shelter category, as recommended by the inspector, the category color changes to green. You can also see that you’re 50 percent of the way towards your goal in the icon under the “Available” column and in the inspector.

Keep your category green, and you’ll be fully funded in time to make a difference!

Happy Thanksgiving!

So, there you have it, folks. Money really can buy happiness—especially when you spend it on someone else! Whether you can give a little or a lot, I hope you have a very happy Thanksgiving. I’m off to buy cranberries.


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Your Next Step

Budgeting is not restrictive. You won’t be spending less, you’ll be spending right. So what do you have to lose? Except all that debt and stress?