At this point, you’re probably thinking about two questions. First, How much should I give? And second, How do I know whom to give to?
Giving will require revising your current budget to make room for investing in the people and causes you care about. If you’re living on 100 percent of what you make, you’re skating on thin ice. There is no margin for emergencies or the unexpected. In addition, living month-to-month doesn’t give you the flexibility to serve others. Consider cutting unnecessary expenses, like subscription services you rarely use, downsizing, renting out a room in your house, getting a second job, or discussing the guidelines for a pay raise with your boss.
We’ve said this before, but it bears repeating: a life well lived is not determined by your bank account but by how you spend your bank account. Ramit Sethi says, “A rich life is lived outside the spreadsheet.” What’s more, “If we can start giving earlier in life, whether it’s five dollars or fifty thousand dollars, that is a critical part of a rich life.” You can earn more, save more, and give more—all at the same time.
The following giving strategies are great starting points:
Model 1: 80-10-10. Live on 80 percent, save 10 percent, give 10 percent.
If you’re on a pretty strong financial footing—you have consistent income, not a lot of debt, and your spending is under control—Model 1 is for you. Now take 10 percent of your income and start giving it away according to your Generosity Purpose.
Model 2: 70-10-10-10. Live on 70 percent, save 10 percent, pay down debt 10 percent, give 10 percent.
If you have debt you are paying off, Model 2 is great for you. Refer to the debt-reducing strategies listed in Part 1. You want to build up your savings to three to six months of committed living expenses, and then reevaluate your budget. Model 2 requires you to reduce your spending in order to begin saving and giving.
Model 3: the variable option. Start giving 1 percent of your income and then decide how much to save and aggressively pay down your debt. Reduce your spending according to the strategies mentioned in Part 1. You’ll likely never miss the 1 percent you are giving, and the psychological rewards are well worth it. Then increase your giving fund by at least 1 percent per year as you knock your debt down and increase your savings.
Kara and I followed Model 2 as struggling newlyweds who still wanted to make giving to our church and other organizations a priority. As our income increased, we transitioned to Model 1 and have made it our goal to increase our giving every year. We got the idea from a couple at our church just after we were first married. They told us they started by tithing 10 percent of their income, but every year they increased it just slightly. Kara and I have tried to follow their model, increasing our giving each year even if it’s in small increments: 10.1 percent, 10.2 percent, 10.5 percent.
The ultimate giving budget? Aim to live on 10 percent and give away the rest. Let me simplify it for you again in four simple steps:
1. Give 1 percent now. 2. Increase your giving percentage each year. 3. Make giving 10 percent your goal. 4. Aim toward living on 10 percent and giving away the rest.
This week, sit down with your favorite drink, turn on some classical music, and begin to make changes to your current budget. Pick the model that works best for you and your family and write a plan for how to stick with it. Then gather your family around the table, pick your Generosity Purpose, and start giving together.
Now it’s time to put your money into motion. Let’s talk about how.
I know you want to be a good steward of your money and make good choices when it comes to diversifying your investment portfolio. Equally important is to diversify your giving strategy. When it comes to giving, many consider it a one-trick pony. “If I give to the Salvation Army, I can’t give to the local homeless shelter.” “If I give to the animal rescue down the street, I can’t give to Meals on Wheels.” “If I give to my church, that’s enough.” No, it’s not—diversify!
Look beyond the obvious. Look around you and you’ll see individuals in your life in need—friends, family, strangers. They might not be hungry or homeless, but with a little boost from you, they can know you believe in them to achieve their dreams.
I call this group of people my “People Portfolio.” Of course, your portfolio will include your own family. Every year I start a family meeting by asking my wife and each of my kids to set goals for the coming year and to reflect on their progress with their goals during the past year. I then ask each of them: “What can Mom and I do to help you reach what is most important to you?” Over the years the answers have ranged from sports lessons, camps, and exercise equipment, to getting evaluated to identify their career and personality strengths. I’m careful not to live my dreams through them or insist that they follow my path. I want them to have the tools that help extract every ounce of potential they have, when they’re ready.
But what about other people who could use some help and encouragement? A friend you could treat to dinner once in a while; another friend who doesn’t have the $600 to fix their car’s brakes; an acquaintance with a great idea but without the knowledge, experience, or wherewithal to capitalize on it.
There’s a secret art to giving that is really fun: anonymous giving. Kara and I are big believers in it. We get such pleasure from dropping money in a mailbox or sending someone an anonymous check. Just remember to disguise your handwriting by writing with your weak hand.
I’ll give you an example. A family friend was visiting one day, and she began talking about a CD she wanted to record and market to youth camps. During the course of our conversation, she mentioned she was trying to save the large sum of money it would take to get her project off the ground. The following weekend I got my family together and we hatched a plan. I went to the bank and had them draw up a cashier’s check for the amount she needed. My daughter then put it in an envelope and left it in her mailbox. The next time we saw her, she told us she had received an anonymous check that had paid for her to record the CD. She was nearly jumping up and down with enthusiasm and had no idea it was us who had left the gift. We weren’t about to tell her.
I have many memories of one of my children quickly hopping out of our car, slipping an envelope underneath a doormat, ringing the doorbell, then sprinting back to the car so we could drive away before anyone came to the door. This is a super easy and fun way to give with your kids.
Sometimes giving isn’t in the form of a cashier’s check, or any money at all. Non-monetary gifts can give someone a similar boost, even if it’s just a weekly text of encouragement. If you see value and promise in a person, think about how you can help that person make their mark in the world.
So many people say, “I have this dream. I want to write a book or release this song. I want to create a business or do something that’s been brewing in my head for years, but I don’t have the resources to do it.” You can be their dream funder, and believe me, it feels as good for you as it does for them. You’ll get your best dividends by investing in people. It makes you a better person and a better investor. And of course, we now know that it also makes you happier, healthier, and wealthier!
There’s a list of names in my phone of people I text every week. Among them are each of my kids, some of their friends, and students who attend the Business Club I teach. Each name is special to me because I know they have the potential to do great things. Every week, I send out a short text of encouragement to each name on that list.
I want to provide opportunities for young people that nobody gave me. If you could go back to your younger self, what would have encouraged you to fulfill your potential? That’s what you now have a chance to do. It could be the young person you know who is bright but needs a break. Maybe they don’t have the money to start junior college. The spectrum of giving is endless, from Tom Golisano building a children’s hospital, to paying for someone’s coffee behind you in the drive-thru. Here are some of my personal favorites:
- Keep homeless packs (with items like blankets, socks, bottled water, and peanut butter jars) in the back of your car to give away at every opportunity.
- Give a cashier’s check or cash anonymously to someone in need.
- Perform a monthly audit of what you have around the house that you never use and donate the items to your local charity- run resale shop.
- Have some fun on the investment side by saying to yourself, “I’m going to put a small amount of money into this stock, and if it does really well, I’ll donate the profit to my favorite charity.” (By the way, that means you’ll pay no capital gains taxes on it!)
- Fund a family member’s or friend’s first year of community college.
- Pay for a course or certification that will aid a family member or friend in an area that interests them.
- Sponsor a child through an organization like World Vision or Compassion International.
- Anonymously send a newly married couple gift cards for groceries or a fun date night.
The options are limitless. Together with your spouse and family, choose your giving strategy, define your People Portfolio, and select a few action steps to start implementing. Put your money in motion now.
(To be continued...)
This excerpt is taken from “Good Money Revolution: How to Make More Money to Do More Good” by Derrick Kinney. To read other articles of this book, click here. To buy this book, click here.
The Epoch Times copyright © 2023. The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.
