Here at Guiding Wealth, we are dedicated to helping you use your money in ways that are most meaningful to you. Yes, it’s a departure from traditional financial advice that harps on saving a 20% down payment for a home and never having consumer debt.
But we think it’s the right call. Because what’s more important — following another person’s financial priorities, or aligning your money choices with your values? We think the answer is simple.
So today, let’s look at charitable giving. This is a value that’s very important for many of our clients. And one of the questions we get asked often is about how to make charitable giving a sustainable habit.
There are many benefits to building a habit of charitable giving. It allows you to continually live that personal value of giving your money to a cause you care about. Additionally, it eliminates that end-of-the-year scramble to make extra donations in preparation for tax season.
So, how do you build a habit of charitable giving that’s sustainable for the long term? Here are six tips to follow.
1. Incorporate Charitable Giving Into Your Budget
Before you start giving away some of your money to charitable organizations, take a look at your budget. It’s crucial to figure out how much you can afford to give away without compromising your financial security or your other goals and priorities.
When you evaluate your budget, remember that there are basically four things you can do with money: spend, save, invest, and give. A well-designed budget should incorporate all those actions in a way that’s balanced, realistic, and in alignment with your values.
So take some time to run the numbers and decide how much of your monthly budget can be dedicated to charitable giving.
Once you know how much money you can give away each month, you can decide how to distribute it among the causes that are important to you.
2. Do Your Research
Are you ready to choose some charities? Spend some time researching the organizations you’re considering. Not all charities use their donations in the same way. For example, some charities use a large portion of donations to pay their executive teams. Other organizations give to a variety of charities — some of which might not align with your values.
So take the time to find out as much as possible about the charities you’re thinking about supporting. And don’t forget to verify that each organization you’re considering will provide you with the tax deduction paperwork you need.
3. Follow Your Causes Online
Do you follow your favorite charities on social media? If not, you might want to start! This can be a great way to find out when extra donations are needed (for example, when a natural disaster strikes).
Following charities online can also give you new ideas for supporting those causes. Donating money isn’t the only way to help. You might find some local volunteer opportunities or ways to increase awareness about the things that matter to you.
4. Automate Your Donations
Once you’ve decided how much to give to which charities, make things easier on yourself by setting up automatic donations. Most charitable organizations will allow you to set up recurring payments, or you may be able to schedule the transactions through your banking app. Either way, setting up automatic donations saves you the time and hassle of making those contributions manually each month.
5. Think Beyond Cash
Did you know that cash isn’t the only thing you can contribute to charity? You can also donate stocks and other “appreciated assets.” It might sound complicated, but the process is fairly simple — and it offers some significant potential benefits:
- You don’t have to deplete your liquid assets
- You may be able to avoid paying capital gains taxes
- You can use a donor-advised fund to divide your gift among multiple charities
- You can donate appreciated assets in your will
If you want to contribute stock, it’s a good idea to talk to your financial planner and/or CPA to make sure you understand all the tax implications.
6. Do What You Can
Finally, remember that when it comes to charitable donations, every cent matters. Many people feel like they have to wait until they can afford to make a big contribution, but it’s not true!
No matter how small or large the dollar value of your contribution is, it’s still supporting the causes and people you care about. So contribute what you can, and enjoy the feeling of using your money in a way that matches your values.
Build Habits That Match Your Priorities
Managing your money well is all about making decisions that match your financial values. And that includes your charitable giving! If making charitable donations is something you value, figure out how those transactions fit in your budget, decide which organizations you want to support, and then automate those donations. And remember, every little bit helps! You don’t need to wait until you can donate a certain amount — it all counts!
Do you want to find more ways to give money to the charitable organizations that matter to you? It all starts with a comprehensive financial plan. A Certified Financial Planner™ can help you build a budget or retirement plan that incorporates donations to charities of your choice.
At Guiding Wealth, we aren’t here to tell you what you should do with your money. Our team is committed to listening to your financial priorities and helping you find ways to honor them. Whether you want to increase your charitable donations or get started with an investment plan, we can help. To get started, call 214-810-3835 or schedule an appointment online.