It’s time to make giving charity the most important part of our budget and our giving rate the metric we are most proud of.
How to make charitable giving a part of your budget
I talk so much about saving and investing. We all do. It is one of the core tenants of personal finance. Save more than you spend. Save for retirement. Your savings rate (how much money you save a month) is obviously a key indicator of financial wellness.
Money is a tool to be used to better your lives and the lives of the people around you. That means that you do have a moral obligation to help people who are less fortunate than you. This involves giving charity, as much as you can.
Giving 10% of your income to charity
As a Jew, I subscribe to this pretty strongly. There is a Torah commandment to set aside 10% of your income for charity. This, unlike the Christian tithing, is not necessarily meant to go to the synagogue (although you can if you want) but rather to charity- to those less fortunate than you.
Giving 10% of your income (Maaser) has always been a key part of my budget. This is not really negotiable. Even when we were making very, very little money this was always set aside.
My parents were not particularly good with money but they always gave Maaser. I was always instructed to keep track of how much money I made babysitting and other odd jobs so I could give 10% of it to charity. Of course, sometimes that meant I was giving a few cents to charity!
The amount of money that you give doesn’t really matter. It’s the percentage that counts (at least according to Jewish law).
Charitable Giving Account
When I receive my paycheck, I immediately deduct 10%. that money does not belong to me. It is not mine to use. It was given to me to be dispersed to others. That is why I immediately transfer that money to a separate checking account. Therefore, I am literally setting the money aside.
I find it difficult to be constantly keeping tracking of my money, how much I gave, how much I still need to give etc. I also find myself in situations where I want to give charity but don’t necessarily have enough money to give at that exact moment. Having the money set aside, with its own checkbook, allows me to set aside the money without having to do any math in my head, or any complicated calculations of did I give? Did I not give? Etc. I also usually have money on hand to donate to someone in need or to an organization that is running a campaign.
Keeping track of Charitable Giving for taxes
Keeping all this separate also really helps with taxes. I can easily track my donations as all the money from that account is going towards charity. Not all the money is going to a tax-deductible place, I absolutely do not only give to places that allow me to take a tax deduction (not that I itemize anyway- my taxable income is too low for that). I am not doing this for the tax breaks (not that there is ANYTHING wrong with that).
I try to give to individuals or to small organizations that need my help, rather than very large organizations. While I have nothing against these non-profit organizations, I like to make charitable contributions to places where it will make a difference and I can see that more with smaller charities.
Giving Charity on Small Amounts of Money
Having a separate account also allows me to put very small amounts of money away if I make $5 than 50 cents gets put aside. I am not going to go and give 50 cents to someone but it all adds up so I can give a “respectable” amount at a later date.
Donating Money- Who do I prioritize?
There are so many people who need charity. So many organizations and programs that are underfunded and so needed! I try to follow the Torah guideline of giving first to your family and then to the “poor of your city” first. This means that I prioritize my giving first to any family member who needs help and then to local organizations or programs that need help. You don’t get to save starving kids in Africa while your own neighbors are in desperate need. (Of course, if you have the need you should help both!).
I know that many Rabbis run “discretionary funds” which gives cash to people in need so that is a good place to start if you are looking for a place to give. They often know who in the community is in desperate need of help as it’s not always obvious. Not everyone who is in poverty walks around with a sign on their forehead. Sometimes poverty lurks in the shadows and we only find out about it when it is already too late.
Publicize Giving Charity
I also think its extremely important to publicize some of your charitable giving. This is not too brag or to make yourself into someone deserving of thanks but to do two things: 1. encourage and normalize giving 2. teach your children (if you have).
Normalize Charitable Giving!
When you discuss and are open about giving charity you will hopefully encourage and normalize other people to give. When “everyone” is giving charity than it becomes the norm and people like fitting it. This must become something that is a priority, even I daresay, as important as other financial goals you may have. Make it clear to other people that you give, you give regularly and you think that this should become the norm. hopefully, others will join you.It's time to make our giving rate the most important part of your budget. How much do you give? #givingrate Click To Tweet
Once my child commented to me that we never give “Tzedakah” or charity. I was extremely taken aback as we do, as you see, give charity. 10% of our income, in fact. I then realized that he never sees me do this. Most of our donations are done by credit card and checks. We have one recurring donation that just gets charged every month. My kids never actually saw me GIVE money to someone. I realized that I was not leading my kids by example. If I want this to be important to them then I had to act in front of them.
Giving money to panhandlers
I made it a point to keep coins and bills in my purse so I can give some money to panhandlers in front of them. Whenever I give someone money we then discuss how important it is to be grateful for what we have and to remember that because we were given financial security (or at least a home and enough money for food) then we must give to others. I also try to do donate food to food banks with them in tow. Although that is not the bulk of my giving, at least they see me engage in the act of giving. As they grow older we can have discussions about the regular giving that we do.
Consistency in Giving Charity
The act of giving, like all personal finance actions, has to become a habit to be successful. It has to be made a regular part of your budget. Imagine if you only saved money for retirement “when you felt moved” or “when you had extra money”. That would be a recipe for disaster! In fact, very little money would actually be saved for retirement.
It’s the same with giving. Waiting for inspiration or for extra money will have you waiting for a very long time. This must become a line-item in your budget just like your rent, bills, or savings. Setting aside this money in a separate account will allow you to do that and then you can give the money when you decide it is needed.
Charitable giving is not just rich people giving away money. Even if you are not well-off or rich you still give money to those who need it.
I would also STRONGLY encourage you to pick an organization/program that is meaningful to you and set up a recurring charge. This is one subscription you don’t need to cut! Even if its $10 a month, you will be doing a great deal of good. This can either count towards your 10% or be listed as one of your bills. If you can pay for Netflix, you can pay for charity.
If you are not in a position to give, or if you feel like you are not in a position to give, then you should get in the habit regardless. Normalize taking money and setting it aside for charity. You can then decide that the most important recipient of your charity right now is yourself. You will become accustomed to giving and you will set up a system that will, one day! be used to help other people when you are in a better place.
I think that giving charity is one of the most important things you can do with your money. We should be proud of our giving rate as much as we are proud of our savings rate!
What is your giving rate?