The other day my oldest little philosopher came up to me and asked what I was working on after her rest time (i.e. nap). I told her I was working on a post for my website. “What’s the post about, daddy?” The post I was working on was about practical investing advice. To my less than ten year old, I simply said, “It’s about money.” We then discussed how we buy things, how we earn money, the purpose of a bank, and a lot of other essential money topics including how and why we tithe and give to charity.
She came away with the idea that money was a pretty important tool that we all need so that we can do what we want in life. However, I didn’t want her to come away with the idea that money is our idol or the end all be all.
As a self-professing Christian, this conversation made me consider our family’s tithing, which we have yet to discuss on this website.
Even if you are not religious, I think that this concept is equally important for you. Giving money comes in many different forms such as giving to charitable causes outside the church. If you are religious and feel called to tithe, maybe this post will help you revisit the topic or start the conversation if you’ve never tithed regularly.
Here’s the outline for today’s post: The importance of charitable giving; a quick discussion on accomplishing your financial goals despite giving money away; why it’s important to do it now and not later, and how to go about doing this.
Why Should I Tithe or Give to Charity?
The first thing out of my mouth on this topic needs to be that money is not the only gift you can give. You can provide your services and time as well.
My second comment needs to be that just because you give your time and your services does not mean that you have an excuse to avoid giving money to those in need or to charitable organizations that serve them. “To whom much is given, much will be required.”
How’s that for a controversial start to this post?
There are a bunch of important reasons to give to charity. I am going to highlight the ones that jump out at me:
- Giving to your church or to a charity prevents money from becoming an idol. For the religious, this is done to recognize where your gifts came from in the first place. For those who aren’t, money can grasp you just the same. Hoarding money isn’t good for anyone and letting it go – in a way that isn’t being spent on you – can be helpful to you no matter your convictions.
- The government encourages us to do this. Though this is likely going to be less of a deduction than it used to be now that the standard deductions are huge ($12,000 single; $24,000 married), the government will still give you a break if you give enough away. Some people give double one year and nothing the next to take advantage of the large standard deductions.
- Most importantly, there are people in this world that are in more need than you and me. Many of them – though not all – ended up there because of circumstances outside of their control. If my family or I ever end up in need, I hope that generous people exist who will come to our aid.
- Those who give tend to be happier! There is science behind this, too. If you want to read a publication on giving and happiness, you can check this one out.
Many people are afraid to give money to charity because it will delay their ability to build wealth. While hoarding money may get you there faster, at what cost? Have you given as much thought to the fees you are paying in trading, funds, or to an advisor?
If not, physician on fire has your back when he looked at the cost of a 1% fee versus tithing 10%. The end result? Fees are killers. Many of you know this, but for those that don’t; giving 10% of your paycheck to a charitable cause will hurt you less financially than a 1% fee.
In the end, you can still give to charity and accomplish your financial goals. If an example would be helpful, I’ll give you my own.
My wife and I give 10% of our monthly paycheck to our church. Admittedly, this money is given post-tax, and some may disagree with that! It ranges from $1500-1750 depending on the time of year and if I have met the $128,000 social security wages limit yet or not.
Despite giving around $25,000 to our church and other charitable causes, we have managed to pay off $128,000 in student loan debt over 12 months and we have accumulated $150,000 in assets. Our net worth has skyrocketed from negative $208,000 and to a positive $46,000.
That’s an improvement of $254,000 in net worth despite $25,000 in tithing/charitable giving. The point is that these do not need to be mutually exclusive goals. You can do both, if they are a priority to you and your family.
And, let’s get real for a moment. If you want to know what you love in this life, then just follow your money. As some guy named Jesus said, “For where your treasure is, there your heart will be also.” Whether you are religious or not, what Jesus said right there is a fact.
A Note About Behavioral finance
The most common excuse that I hear when people don’t save money is the same excuse I am given when people talk about not giving to charitable causes. “When I make more money – I’ll get around to that – because it’ll be easier then.”
This, of course, is hog wash.
The truth is that if saving – or charitable giving – are not important enough for you to carve out now, then they likely never will be. Both of these endeavors take a cold-hearted discipline that many people lack.
If you are in this camp, stop making excuses. Simply tell the truth and say it’s not a priority, or start doing what your heart is telling you to do. That goes the same for saving for retirement.
Ways to Give
There are a lot of ways to give to charitable causes. Cutting a check or submitting it electronically exists at most churches these days. You can also perform an internet search on local organizations where you can give of your time, your money, and/or your services.
If you want to get fancy, you can also consider starting a Donor Advised Fund (DAF). POF has written prolifically on the topic. Check out the list of posts at the bottom of his original posts on DAF, which can be found here.
If you’d like to know more about the pros and cons of a DAF, I’ll point you over to a debate between Physician on FIRE and the White Coat Investor on the topic of using a DAF (or not).
Giving to charity is important regardless of your religious convictions. When you sit down to make your budget or track your spending, make sure you leave room for at least having this conversation.
In the end, giving to charitable causes prevents money from becoming an idol, makes you happier as a human being, and you get a tax break if done properly.
What do you think about this topic? Do you tithe or give to charitable causes? If not, why not? If you do, why and how? Leave a comment below.