John Wesley famously said, “Earn all you can, give all you can, save all you can”. Most of us will admit that generous giving is an admirable quality. How does this fit in with the quest for financial independence?
At the moment, as an example, we live on roughly 22% of our joint salaries (post tax). Surely that leaves 78% to donate to charities and organisations that desperately need financial support? John Wesley also said “Do you not know that God entrusted you with that money (all above what buys necessities for your families) to feed the hungry, to clothe the naked, to help the stranger, the widow, the fatherless; and, indeed, as far as it will go, to relieve the wants of all mankind?" Whether or not you believe in God, the needs in this country are so enormous that it is difficult to sanction holding on to resources which could serve others.
On the other hand, if we are particularly good stewards of our wealth, then surely it is better for us to take good care of it, ensuring optimal growth, and allowing much greater generosity in the future - putting compound interest to work for charity, as it were. The hope is that after reaching financial independence, our ability to be lavish with our giving will be much larger. Besides, if we don't save at all, we ourselves will be a burden on society at some point in the future when we are no longer able to work.
And if we can imagine a third, less altruistic hand in this argument, what about the whole point of this blog? Aren't we supposed to be saving everything we possibly can so that we can reach financial independence as quickly as possible? That couple of thousand rand that you give away each month could be powering the financial independence engine and shaving months if not years off your working life.
Since this one is probably a bit easier to answer, let's put it to rest now:
Okay, so assuming that you agree with me that a certain amount of giving should happen now, the question really comes down to this: where is the balance between the "give all you can" and the "save all you can" clauses of the Wesleyan advice with which I started this post?
I think this is really something each individual or family needs to figure out for themselves. I'll share our thinking, not because I think we've necessarily got this sorted, or because we feel grandly self-righteous about how much we give (as you'll see, we haven't reached our giving goal yet), but because it can be helpful to have a benchmark; somewhere to start your own thinking.
I mentioned that we live on approximately 22% of our post tax income. We donate about 8% of that income to two organisations - one religious, one education NGO. The remaining 70% goes to savings.
Our end goal is to be giving the same amount that we live on. Wouldn't it be wonderful if we could each support another family to the same standard of living that we enjoy? Of course this money wouldn't go to one other family, but would be spread out across the organizations that we support. It simply gives us an image of how we would like the world to be: every person fully supporting one other person.
We haven't reached this giving goal yet. At the moment, it would just put our financial independence goal too far away. We are (theoretically) only supporting just over one third (8/22) of another couple, living at the same level as we do. But we're working on it. And after financial independence we are confident that this will be possible, if not exactly easy. It forms part of our plan: we are saving more now, aiming for a bigger goal, so that we can make it happen in the future.
In closing, I really do believe that giving, both now and later, is an incredible opportunity. It puts you at the forefront of a different way of seeing the world; a way of seeing the world that isn't about "us" and "them" but only about all of us, together, doing the best we can. Even if we don't get it right straight away, it is a dream that we can all work towards, starting with the smallest donation and building up from there.
To gracious giving, and generosity of heart!
jjdaydream
Now or Later?
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| As always, there are several sides to the argument... Photo credit: Kristofher Muñoz (CC-BY 2.0) |
On the other hand, if we are particularly good stewards of our wealth, then surely it is better for us to take good care of it, ensuring optimal growth, and allowing much greater generosity in the future - putting compound interest to work for charity, as it were. The hope is that after reaching financial independence, our ability to be lavish with our giving will be much larger. Besides, if we don't save at all, we ourselves will be a burden on society at some point in the future when we are no longer able to work.
And if we can imagine a third, less altruistic hand in this argument, what about the whole point of this blog? Aren't we supposed to be saving everything we possibly can so that we can reach financial independence as quickly as possible? That couple of thousand rand that you give away each month could be powering the financial independence engine and shaving months if not years off your working life.
Since this one is probably a bit easier to answer, let's put it to rest now:
Reasons to Give Now:
- Gratitude. Giving really is a grace. It gives me a chance to reflect on everything we've been given. How wonderful that we are in a position to have so much more than we need that we can give money away! How wonderful that we are able to touch the lives of others, even in a small way. How wonderful that we are able to encourage and support causes that we believe in.
- There are an awful lot of needs right now. Telling the NGO to let the children in the orphanage hang on a few years for their supper because we're just letting their donation grow by compound interest... you can imagine how well that wouldn't go down. The church roof might actually fall in by the time we are good and ready to start giving.
- Good habits die hard. Even if you are giving less than you plan to give in the long run, it means it won't come as such a shock when you finally reach the point where you want to start giving a significantly. The danger of course is that we get so attached to our money that by the time we were going to start, it's just too much... or we haven't taken account of it in our FI calculations, or, or, or... Far better to put the habits into place from the beginning, even if it burns a little bit.
- Tax. You won't ever make money by giving but if you're giving to the right types of organisations (section 18A) then the government will give you a tax rebate on some of your donations. Up to 10% of your taxable income can be deducted from your taxable income via donations. So you pay a bit less tax. (Mr Cent(ri)frugal will do a more detailed post on this later - this is called delegation.) What is comes down to as far as I'm concerned is you're forcing the government to donate money to the charity of your choice. I like.
- Giving in other ways. This doesn't really belong on this list, but it is still something to consider. Sometimes, we can (and should) be giving acts of service, not only money. This costs nothing but time, but can be hugely valuable. Does the organisation you're supporting need volunteers? Maybe this is a way that you can maximise both giving and saving. (I still don't think financial giving should be off the table, though...)
How much then?
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| Not whether there should be a gift, but what size the gift should be. Photo credit: FutUndBeidl (CC-BY 2.0) |
I think this is really something each individual or family needs to figure out for themselves. I'll share our thinking, not because I think we've necessarily got this sorted, or because we feel grandly self-righteous about how much we give (as you'll see, we haven't reached our giving goal yet), but because it can be helpful to have a benchmark; somewhere to start your own thinking.
I mentioned that we live on approximately 22% of our post tax income. We donate about 8% of that income to two organisations - one religious, one education NGO. The remaining 70% goes to savings.
Our end goal is to be giving the same amount that we live on. Wouldn't it be wonderful if we could each support another family to the same standard of living that we enjoy? Of course this money wouldn't go to one other family, but would be spread out across the organizations that we support. It simply gives us an image of how we would like the world to be: every person fully supporting one other person.
We haven't reached this giving goal yet. At the moment, it would just put our financial independence goal too far away. We are (theoretically) only supporting just over one third (8/22) of another couple, living at the same level as we do. But we're working on it. And after financial independence we are confident that this will be possible, if not exactly easy. It forms part of our plan: we are saving more now, aiming for a bigger goal, so that we can make it happen in the future.
In closing, I really do believe that giving, both now and later, is an incredible opportunity. It puts you at the forefront of a different way of seeing the world; a way of seeing the world that isn't about "us" and "them" but only about all of us, together, doing the best we can. Even if we don't get it right straight away, it is a dream that we can all work towards, starting with the smallest donation and building up from there.
To gracious giving, and generosity of heart!
jjdaydream
Wesley's sermon is quite accessible, and still makes good sense. I can lend you a copy of the 44 sermons or you can see it on line :)
ReplyDeleteThanks :) I'll look it up!
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