Why generosity matters for your financial wellbeing

When we think about money, the conversation usually revolves around saving more, investing wisely, and avoiding financial mistakes. It’s a mindset built on accumulation. But there’s another dimension to financial wellbeing that’s often overlooked - generosity.

What is the hidden value of giving?

For centuries, cultures and religions have embedded giving into daily life. The practice of tithing (offering a tenth of one’s income) is rooted in the idea that generosity is both a duty and blessing. Gifting has long been seen as a moral obligation, a way of showing care or fulfilling social expectations.

But modern behavioural science suggests something deeper: giving is not only generous, it is profoundly self‑serving in the best possible way.

Recent research backs this up. A 2023 study led by Ashley Whillans at Harvard Business School, in collaboration with Canadian psychologists Lara Aknin and Elizabeth Dunn, found that prosocial spending (using money to benefit others) consistently boosts happiness, especially when the giving feels intentional and connected to relationships. Dozens of experiments confirmed that the link between generosity and wellbeing is robust across cultures and contexts.

What is the psychology behind generosity?

Economists and psychologists have long explored what motivates people to give. Economist James Andreoniopen_in_new coined the well-known concept known as the “warm glow” effect - the emotional lift we feel when we part with money for someone else’s benefit. It’s a paradox: outwardly charitable yet inwardly rewarding.

This feeling is more than just a fleeting boost. Giving creates a powerful positive feedback loop: the more intentionally we give, the more fulfilled, connected and enriched we feel in return.

What are the returns on money beyond financial growth?

Traditional financial planning focuses on measurable returns - growth rates, compound interest, and portfolio performance. While these remain essential, they don’t capture the full picture of what money can do.

But generosity introduces a different kind of return – one measured not in percentages or balance sheets, but in happiness, resilience, and purposeful connection. Studies show that generosity reduces stress and anxiety, creating emotional balance. It builds stories and memories that outlast the transaction, shaping how we are remembered. In this way, gifting becomes part of our legacy.

These are outcomes that don’t show up on a balance sheet, but they play a powerful role in overall life satisfaction.

How to integrate gifting into your financial plan

Of course, gifting must be balanced with responsible saving. The point is not to give recklessly, but to integrate generosity into a broader financial plan. Financial advisers can help us to identify sustainable ways to gift – whether through structured giving, estate planning, or small, intentional acts of generosity.

Gifting is not a contradiction to saving, but a complementary strategy that builds emotional resilience alongside financial security.

Practically, this could mean:

• Considering a long-term solution for that friend or sister you must repeatedly bail out. Is a retirement product not a better solution?
• Instead of spoiling the privileged grandchildren with another movie night, how about educational savings?
• And for a parent who has always supported you, their medical expenses during retirement are waiting.