Friday, August 18, 2006

A surprising way to get better control of your money

Want to get a better handle on your money? Then give some of it away. Regularly.

In my last post on teaching kids about personal finances, I included "giving" as one of the four basic components they should learn about. Sure, generosity is an important trait to cultivate in children. But it's an important concept to apply in our lives as adults as well. Believe it or not, giving away your money can help you better manage it.

Break the hold
Why? Not only because it feels good to help others, or because you can get a tax deduction for gifts to qualified charities.

Regular giving helps break money's grip on our hearts and spirits. Let's face it, we give money a lot of control in our lives. Every major decision we make naturally involves some consideration of the monetary cost to ourselves versus the benefit we'll receive. The result usually dictates our actions.

Giving, by contrast, is very "unnatural." We exchange our money, which represents the sweat of our hard work or what we believe we deserve, for a benefit that may be intangible, or that we may never even see. It gets us in the habit of seeing how our resources can be used for much more than just meeting our own immediate needs and desires, which ultimately are the basis for money's stranglehold.

Monthly reminder
M and I give 10% of our gross income--that's before taxes--to our church. Our monthly tithe is the second-largest bill we have, after our mortgage.

I'll be honest, it isn't always the easiest payment to make, especially since going to one income. But it has changed my perspective. It's a regular reminder that many of life's blessings don't just come from what I own or can buy.

How to (gulp!) start
Here are three tips for using the act of giving to break money's grip:
  • Give first. Make gifts the first "bills" that you pay, to avoid basing your decisions on what's left over after meeting your own needs.
  • Give consistently. Give a set amount at regular intervals--weekly, monthly, bi-monthly-- to make it a habit.
  • Give so it hurts (at least a little). Does the amount of your gift pass the "gulp" test? If you find yourself going "Gulp!", when you think about just how much you're giving away, you're on the right track.


Jimbo said...
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Jimbo said...
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Jimbo said...

To paraphrase my father, "If you can't spend money on someone other than yourself at least once of week, you really need to reexamine your priorities." So your article was a good reminder that life shouldn't all about me, me, me, and filling the house with electronic clutter while others have real needs that are going unmet. It's a bad approach both fiscally and morally.

CJ, your 10% giving level is incredibly generous. But I prefer to spread my money around across a number of organizations. Think of it as charitable diversification.


Anonymous said...

uh.. funny style..