Give the Gift of Long-Term Happiness

We’ve all seen the pictures: Kids in their pajamas sitting amongst dozens of presents stacked high around them, massive grins on their faces as they get ready to rip through the wrapping paper like the Tasmanian Devil. As parents, we think, “Wow, that is one happy kid. He’s the center of attention, and outside of that itchy sweater from grandma, he got everything on his holiday wish list! What a moment! This kid will remember this day for the rest of his life.”

Sadly, this is probably not actually true. While unwrapping presents, especially the kind that make someone squeal with joy, does bring instant gratification, studies show that material items usually do not increase long-term happiness. While I can’t imagine very many people are totally against giving presents to friends and family during the holidays or at birthdays, there are also ways to blend the joy that a gift brings today with a more enduring sense of happiness and contentment with life.

Gifting an experience to a child or grandchild allows them to participate in the excitement of a holiday or birthday while also enabling them to better remember these events in the future.

How many times have questions put to an 8-year-old granddaughter or 10-year-old nephew about a particular gift, even just months or weeks later, been met with a shoulder shrug? Perhaps not the response you were expecting. Unwrapping presents surely can create excitement, but by creating experiences alongside such gifts, the event will become something to remember and relive for years to come.

Do you remember hearing about The Giving Pledge in the news? The initiative, championed by the Gates family and Warren Buffett, is a commitment from each person who signs the pledge to give away a majority of their wealth during their lifetime or upon their death. Let’s take this concept and turn it into the Family Gift-Giving Pledge. The idea is to split the amount you budget for celebrations evenly between material gifts and experiences. Experiences can encompass anything from a donation of time or treasure to charity, helping to save for college, a family trip, a contribution to a child’s investment account, or a personalized birthday party.

For example, my daughter loves gymnastics. She gets to run around, climb over giant mats, jump on trampolines, and swing from things tethered to the ceiling without me having to yell, “No hanging on the chandelier!” For her third birthday, we hosted her party at a local gymnastics studio. This gave her the perfect mix of instant gratification (cake and presents) and a memorable experience (enjoying gymnastics with friends). Even after all the presents have been forgotten, chewed up by the dog, or grown out of, we still get woken up in the wee hours by a little girl standing in our room asking, “Can we go back to Miss Kelly’s gym?”

Think back to holidays past, your birthdays, or other family celebrations. Which events do you remember and what makes them special when compared against the many other celebrations you’ve lived through? Experiences tend to embed themselves in your memory and elicit feelings, hopefully good ones, for years to come. With an experience, you get the excitement of booking or scheduling it, feelings of anticipation as it approaches, the joy of the experience itself, and then the satisfaction of reliving the fun through pictures or sharing stories with friends and family.

So, this holiday season, consider taking the pledge and giving your family members – children, parents, siblings – the gift they might be truly looking for: a great experience that will create outstanding memories and lasting happiness.

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This article is for general information only and is not intended to serve as specific financial, accounting or tax advice. IRN-20-1337

© 2020 Buckingham Strategic Wealth®

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Kurt Wunderlich, CFA, CFP®

As a client development advisor, Kurt works with a team focused on delivering an outstanding experience for our clients as they begin their relationship with Buckingham. The most rewarding part of Kurt’s day is collaborating with clients and advisors to develop creative solutions and find the ideal fit based on their unique goals and circumstances.

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