According to research, generosity actually makes us happier. Giving provides a sense of satisfaction and interconnectedness. The next time you’re scrolling through Facebook, take note of how many birthday fundraisers you’re invited to contribute to. Millennials may get stereotyped as a selfish generation, but the statistics don’t support this generalization. According to Nonproft Source, in 2017 84% of Millennials donated to charity compared with 72% of Baby Boomers.
We know we are a generous generation, but the ways that we give to charity, how those charities use our dollars, and the entire cultural conversation around charity is evolving. You probably don’t give in the same ways your parents did, nor do you need to. Giving is easier than ever, but we’re also constantly bombarded with causes, and support is only a click away. That can all add up fast, so it’s important to stay mindful about your spending, even when it’s for a good cause.
At Stash Wealth, we get a lot of questions from HENRYs™ [High Earners, Not Rich Yet] about how best to give. So we’ve decided to break it down in three questions:
- Which causes do you care about most?
- How much can you afford to give?
- When should you give?
Once you answer these three questions, you’ll be all set to give generously to the causes you believe in, without going beyond your means.
1. Which Causes Do You Care About Most?
An important first step to creating a charitable giving plan is picking the causes you want to support. There are many nonprofits that could use your donations, so how do you decide?
And remember, charitable giving isn’t only about your dollars, it can also be about your time.
We suggest determining your top three causes. This doesn’t mean you only can give to three charities, it just means getting clear on what you want your money to support. Which is most important to you: the environment, clean water, arts education, eradicating homelessness, animals, children in need? The list can go on and on, which is why it’s important to pick three.
Next, research organizations that support these causes. No one wants to get scammed, especially when you’re donating your money. Thankfully, researching charitable organizations has never been easier. Tools like Charity Navigator, Charity Watch, and Guidestar can help you determine if an organization you would like to support is legitimate and how much of your donation actually goes toward supporting the cause. We also love this HuffPo article on How To Tell If A Charity Is Legit.
Bonus: Think local. Beyond taking to the internet to support causes, walk down main street in your hometown and pay attention to what organizations are doing work in your community. Consider how far your donation would go and the feeling of connection you might have to the organization you’re giving your hard-earned money to.
And remember, charitable giving isn’t only about your dollars, it can also be about your time. Local organizations often offer volunteer opportunities.
2. How Much Can You Afford To Give?
If you’re following our number one piece of financial advice and have adopted the Reverse Budget™, this step should actually be a piece of cake. For those of you new to the concept, here’s a quick breakdown:
Break down what you’re saving for into categories, create a savings account for each of those categories (we love online high yield savings accounts like Marcus and Ally), and automate your savings into these accounts. After your savings leaves your checking account, you spend the rest on your bills & blow the rest on your lifestyle!
When you’re creating a charitable giving plan, all you need to do is factor in how much you can give based on how much you have left over. Or you can also see if you can cut down any of your other categories to make room for more charitable giving.
The key is to make this as easy on yourself as possible. That’s where a designated bank account and automation come in. If you know you can give $50/month to charity, automate that amount into its own savings account and nickname it “Charitable Giving,” so you aren’t tempted to dip into it for other expenses.
There is also a growing body of research that shows that giving generously actually makes us more prosperous and wealthy.
You may be wondering about automating your giving to the charities themselves. Many nonprofit organizations make this possible through Paypal or their own systems. This brings us to our final question.
3. When Should You Give?
The short answer is: when you want to. Now for some more nuance.
Giving on a regular basis, e.g. monthly or quarterly, can be fantastic. Plus, if you’re doing this, the automation into a separate account isn’t necessary. Nonprofits appreciate the regular income and know they can count on your donations. However, at the end of the year, a charitable organization is going to be just as happy to receive a $120 check as they are to receive $10/month. The important thing is that you make your charitable giving plan and stick to that plan. The plan part is important.
One final piece of advice: be flexible.
How and when you donate is personal. Your priorities are bound to shift over time. Your charitable giving can and should shift to match. Don’t beat yourself up if you can’t give as much or as often as you did last year, and don’t forget to celebrate when you can give more than you expected.
There is also a growing body of research that shows that giving generously actually makes us more prosperous and wealthy. So if you’re hoping to accelerate your HENRY status from “Not Rich Yet” to “Almost Rich,” you might consider adding a charitable giving plan to your financial priorities.