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Up Your Giving Game

Over the holidays there was a stir in the media when CNBC published an article on the budget breakdown of a 25 year old making $100K living in a high cost of living city (Boston).

His budget breakdown

Naturally, this resulted in an outpouring of disbelief as people across the internet could not possibly understand how anyone could live on a budget like this.

From the comment section, it seemed like a vast majority failed to even read the article. Instead, they saw the graphic and picked out specific line items, how that did not relate to their own life, and immediately dismissed the entire article and the main message of it (live within or below your means) as impossible.

The most common detraction’s I saw was how his rent, internet and house cleaner were so cheap in a big city. It was very easily explained in the article as he lives with four roommates, naturally lowering those costs, but don’t tell everyone else that! They do not want to hear it.

As I make just a little less than this person, I couldn’t help but pull the cardinal sin and naturally compare my budget to his.

Sure he pays less in rent than I do, but I only have one roommate instead of his four. If I chose to I could live with 4 roommates I’d probably pay somewhere close to what he does. He also pays less in transportation costs, but more on groceries than I do.

I noticed a lack of Entertainment and Travel line items, but perhaps he likes free things around town and does not travel often. Hey, I’m not here to judge, whatever makes him happy! While this article wasn’t specifically on the FIRE movement, his non-materialistic ways seems like he would fit right in no problem.

The rest of his budget makes sense to me, until we get to the elephant in the room… that donations line item.

He’s Giving How Much?

$615 each month in donations… wow! At first I was in shock. That is a very high number… who would give that much away?

Running the numbers though, $615 each month is $7,380 over the course of the year.

Since he is making about $100K, that means he is donating about 7% of his pre-tax income to charity (10% of his after-tax income assuming about 30% in total taxes).

The percentages puts it much more into perspective. After all, I know of and have heard of many people who give 10% of their income to charity. Others I know tithe, and give 10% of their income to their religious organization.

Perhaps the real shock factor is that of all the people I know that donate 10% of their income, they are all older than me. This is the first time I’ve seen it from someone younger.

This made me really think to myself. Is giving a priority for me?

Is Giving A Priority?

Since I began my full time job, I’ve always thought that I would make giving more of a priority someday. The first priority was to get my own financial house in order by saving and investing.

Now, four and a half years later, I’ve done a fairly good job at that, but that someday still isn’t here.

I share all my spending, and you can see I only donated a couple hundred dollars last year (mixed in with gifts for birthdays/Christmas) despite earning over $70K in after-tax income.

Less than 1% of my income.

This was a wake up call. Why am I giving so little?

I’ve read how some people plan to give relatively little during their lifetimes, but then give most if not all of their wealth away upon their death. This is very noble and generous and something I have considered too.

But here’s the thing: for younger people we may have 50, 60, 70+ years of life left in us. There are people, places, causes that need help now, and 50-70 years is a long time to wait.

So what to do? Why not both?

If you are fortunate enough to be pursuing the FIRE movement at a relatively young age, surely you are in a position in which you can prioritize both right?

Up Your Giving Game

With this in mind, I decided to take action and rework my own 2019 budget to up my giving game and make it more of a priority.

My combined Gifts/Donations line was only budgeted at $50/month in 2018. For 2019 I quadrupled that to $200/month. I plan for all the extra to go to donations and maintain my gift giving at the same level.

This means I plan to give close to $2,000 in donations for the year (2-3% of after-tax income).

This was the number I came to after weighing my short and long term goals. Could I afford to give more? Absolutely.

However, you must keep in mind that every dollar you give, you are not investing, and thus losing out on the compounding returns over the years.

My long term goal is financial freedom, where I can spend my time where I truly value it. Volunteering my time more has always been part of that plan, and without a 9-5 job in the way, I know I can make that happen.

This was the compromise I made for myself, but I can always change my mind and give more in the future as my situation changes!

As I made changes to my planned donations in 2019, I challenge you to increase your giving as well!

Some of you may already give more than me, some less, but comparing dollar amounts or percentages is not the point here.

Give whatever amount you are most comfortable with and what suits your short and long term goals, but make your 2019 giving even more than you gave in 2018!

Even if it’s by some *seemingly* insignificant amount, like $10 more, it makes a difference if everyone does it! A hundred people each giving $10 more means an extra $1,000 towards charities. If you get more people to do that… you get the exercise.

So what say you!? Will you up your giving game in 2019? I hope your response comes in this form: 🙂

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Do you prioritize giving now or in the future? How do you balance giving with you savings and investing goals?

12 thoughts to “Up Your Giving Game”

  1. I think this topic is entirely a personal decision and I wouldn’t shame anyone either way.

    For me, I’ll be honest and say it’s not something I prioritize. It would take a lot for me to donate any kind of significant money to a charity. Maybe it’s the cynic in me, but I am skeptical of most charities because of the administrative costs. I can’t shake the feeling that somebody behind the scenes is lining their pockets while putting up the sympathetic front that they’re helping people.

    I’m sure there are truly good charities out there, but I wouldn’t know where to start. If someone prioritizes civic engagement, I believe volunteerism makes more of an impact (and it’s often immediate) for real people out there. I would think the volunteer would get more satisfaction as they actually see the impact of their work instead of simply writing a check to some large organization.

    1. Absolutely, definitely no shaming going on by anyone I would hope, it’s a completely personal decision.

      I understand your stance on the charities with high administrative costs, there are some that are just way too high to be justifiable. If you take a look at charitynavigator.org it lists thousands of charities and it rates them all based on administrative costs and where the money goes. It’s worth taking a look!

      Another way you could still contribute is through directly giving to people or causes you know are worthy (via go fund me for sick people, etc) or give to smaller, local charities to help improve your community. Obviously volunteering is extremely beneficial too, so there are many ways other than just donating money to help improve the world around you!

  2. I love that you took this on especially because it hasn’t been your strong suit in the past. I started tracking my giving in 2017 and it was pitiful before then. 2018 was better, and 2019 will be better again. I’ve left those numbers out of my monthly updates in the past (in order not to talk myself out of giving while chasing a savings %) but I’m really considering laying it all out there this year.

    1. That’s awesome your giving has increased over the years too! That is my plan as well going forward.

      I was debating whether or not to include those as expenses against my savings rate as well, but ultimately decided to include them since even though I could save that money, I’m making a deliberate choice to send it elsewhere. Totally up to you though!

  3. Giving more is something that we’re working toward, too. Right now we give about 5% of our income, and I’d like to increase that to 10% this year. We’ll see how it goes!

  4. I love your point that while giving lots in the future (which I also hope to do) is a worthy goal, there are people in need NOW. I’m nowhere near FI but I am certainly comfortable enough to be able to give back with the money I have leftover each month to the many, many people with far less than I have. I certainly kicked up my giving in 2018, but love this challenge to do more in 2019!

    1. Absolutely! I think that’s very admirable that you are prioritizing giving at the moment, despite the fact that you could put all of it towards savings to help speed up your path to FI. It’s always good to give a little along the way, and eventually settle into a giving number that works for your situation 🙂

  5. Nice article, I enjoyed the read and it definitely made me think.

    I’ll admit, I have not prioritized additional charitable giving to this point. My reason being twofold:

    1) With an effective tax rate of over 20% and roughly 2/3 of the federal and state budget allotted to social welfare programs, I’d estimate I’m currently donating $5-10,000 per year to charitable causes.
    2) My annualized portfolio growth rate is typically in excess of 7%, so it seems my dollars could do more good for more people if I took the Felix Dennis approach and invested to “get rich, then give it all away.”

    Your point about people being in need now is a good one though, and there’s definitely a lot of worthy causes not currently supported by the government. Your post has me reconsidering a bit.

    1. Thanks! Yes it’s definitely someone that everyone should be considering. I hear what you’re saying, and I get that line of thinking, especially considering that was my plan for the longest time too.

      I just think that given how many great causes there are out there at this moment, it would be nice to be able to give directly and help them out now. Who knows, you may even see the impacts that your donations make while you are living, and that just has to feel amazing as an added bonus.

  6. Great to read your article increasing discussion on this topic. Charitable giving is a priority for me and I aim for around 5% of my wages (though this fluctuates with my variable gig-based income).

    Are you familiar with the Effective Altruism movement? Mr Money Mustache mentioned it at some point. The intention is to direct charity dollars in answer to: “how can we use our resources to help others the most?” The Effective Altruism organisation researches charities thoroughly to determine which get the most ‘bang for your buck’. It’s an attractive, logical and evidence-based approach to giving, that I feel would appeal to rational FIRE followers.

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