Key Points:

The economic crisis which is engulfing us will make this a grim Christmas.

But before this, we've had a reasonable period of economic growth and prosperity. Yet the high incidence of depressive or stress-based illnesses and the especially alarming levels of youth suicide and self-harm suggest that, as a society, we have not necessarily converted greater wealth into increased wellbeing.

So the economic downturn may provide us with a good chance to step back and think more deeply about what we are really trying to achieve in our lives. And at this time of the year it is especially pertinent to ask: how can we develop a true spirit of generosity? A spirit which helps us rekindle the true meaning of Christmas, irrespective of one's religion, and more generally, allow us to get more out of life.

The latest psychological research shows, thankfully for our wallets, that excessive consumption is not the answer. While there is nothing wrong with material pleasures per se, our neural systems very quickly get used to them and they provide no lasting happiness. More enduring wellbeing comes from discovering those activities that give us a deeper sense of engagement in life - what happiness guru Martin Seligman calls the gratifications.

Gratifications draw on our personal strengths and engage us in challenging activities requiring skill and concentration. They are activities that create a sense of flow in which we truly live for the moment, such as dancing, painting and writing. And if some of your gratifications can help other people, then that greatly multiplies the sense of real meaning to your life.

So where do you start? First, try and build giving into the way you make a living. If you are in one of the caring professions such as teaching or nursing, you are off to a good start. However, professions such as investment banking, commercial law and business strategy also offer opportunities for individuals to apply their skills to help others - for example through pro bono projects.

Generosity will work best if your desire to give is sparked by a sense of inspiration, not obligation. A useful way to explore this is to think of those things for which you feel a strong sense of gratitude, offer inspiration or demonstrate injustice.

Here's an example. When launching my book How Much is Enough? I reflected on how grateful I felt that my children went to a school that helped to teach them how to think, rather than what to think. I decided to take my children to school the next morning, give each of their teachers a copy of the book and express some words of gratitude.

The teachers were at first apprehensive to see a parent arrive unexpectedly, and then surprised to receive a gift. Whether this made them happy, I simply don't know. But I experienced a good feeling that lasted for weeks, even though the value of the gift was small. It highlighted how rewarding giving can be when the motives are genuine.

Try a few experiments for yourself. What better time is there to start than when giving a gift for a birthday or Christmas to someone who "has everything"?

Think of a present that you have bought for your partner or someone close to you and write down, out of a possible 10, how happy buying that present has made you and how happy you think it will make the recipient.

Next write down how happy gifting money to a charity in the name of your partner will make you and him or her respectively. Then visit www.kiva.org, the eBay of microfinance, where you can change the life of a poor entrepreneur in a developing country for as little as $25. The website works in conjunction with 67 microfinance institutions around the world that recommend the borrowers and administer the loans. The process is simple - you browse the profiles of potential borrowers, find one you like and pay via PayPal.

You can buy a poor family in Azerbaijan a goat or help a baker set up shop in Cambodia. Make these gifts in the name of your partner. Once the loans are set up, your partner will receive regular repayments, usually monthly, until the loan is paid off and regular updates on how the recipient is faring.

The repayment rate on these loans is a staggering 99 per cent. When the loan has been repaid, your partner can do what he or she wishes with the money but don't be surprised if they lend it to another entrepreneur and start the cycle again.

The beauty of kiva is that it is a peer-to-peer transaction, which means that all your money reaches the recipient. Compare this with some of the bigger charities where 30 per cent of the money gets eaten up on overheads.

Now note down how happy you think this gift will make you and your partner. After a while, ask your partner to rate how happy this gift has made them, and also rate it yourself. Compare it to the rating that you gave your material gift.

Most people who have tried this experiment do not expect it to do much for their happiness or that of their partner. However, as they go through the exercise their perception changes. A month after the gift is given, both parties invariably report higher wellbeing from the choice of this gift than a material item.

This exercise can also work well with kids. Introduce them to marking their birthdays and Christmas by giving as well as receiving. Give your children some money to buy whatever they want, and a similar amount to spend on any charity they want to support.

By becoming more generous of spirit, you can increase the wellbeing of the people around you as well as your own. It is one of the best investments in yourself and others that you can make.