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Why Giving Feels So Good ... Financially

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As the holidays set in, and the season of giving begins to brush elbows with the cabal of commercialism, we're presented with -- to borrow from the classic education vernacular -- an ideal "teaching moment."

So exactly how do you convince those in a material world to love giving as much as getting? Easy: Explain how one begets the other.

Giving makes you happier
Behaving charitably really is good for you -- and not just in an "eat your peas" way. Research has shown that the benefits of generosity are twofold.

First, we get a psychological lift from helping others. According to Knox College psychology professor Timothy Kasser, people who focus on generosity are happier (and healthier!) than those mired in materialism.

A recent University of Oregon study found that charity stimulates the brain centers that tell us that our basic needs are being met (the foundation for success, according to Abraham Maslow -- as in the man behind Maslow's hierarchy of needs), letting us know that it's safe to dial down our hunt-gather-hoard-guard setting.

You don't even have to write a check to get good giving vibes: Offering time or lending skills to a good cause takes us out of our navel-gazing routine and connects us to something grander. This perspective allows us to see just how precious a helping hand can be to others.

Besides helping others, a nice side effect of being generous is that it boosts your own standing, which leads us to exhibit B in our "It Pays to Be Good" presentation ...

Giving makes you richer
Giving has been shown to tangibly boost the benefactor's bottom line -- and not just taxwise, either. Research shows that people who are observed behaving charitably are often recommended for leadership positions in their professional lives.

The Social Capital Community Benchmark Survey further supports the two-way correlation between giving and getting the financial warm fuzzies. As you might expect, we're more generous when we're flush with cash (a 10% raise increases our altruism by about 7%). But the survey also revealed generosity's boomerang effect: A family that donates just $100 more a year than its neighbors (all else being equal) earns, on average, $375 more.

The cycle of wealth doesn't stop there: Every $100 in extra giving increases the U.S. GDP by $1,800; and each $100 increase in a household's income generates an average of $1.47 more for charity. So, give more, and you boost the economy, which helps you earn more and become capable of giving more.

Reap the rewards of sharing
Philanthropy is part of the Fool's mission, and early on we realized that together -- with our community -- we could make a real difference in the world. Our year-round Foolanthropy drive is committed to helping ensure that young people enter adulthood armed with a basic financial education. This year's community-chosen partner is DonorsChoose.org, which allows "citizen philanthropists" to fund projects and proposals submitted by public school teachers.

Good karma -- and the chance that it'll come back to reward you -- is just a click away.

Dayana Yochim gives not just for the warm fuzzies, but for the opportunity to help spread financial wisdom to those who need it most. She doesn't own shares of the companies mentioned in this article. The Fool has a disclosure policy.


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