KLE 38: How Much To Give Away To Charity

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  • July 6, 2010

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For some people tithing is important, if not a personal commitment. For others, the urge to donate is strong.

So, now that you are saving strongly and are finally on the road to financial salvation (then on to true financial success), it’s time to start thinking about how much to give away to friends, family, and charity once your Pay Yourself Twice program is in overdrive.

But, how much should you give?

Some would say 10% of your gross income (since donations are generally tax-deductible), others would say “give away nothing”; instead, let me give you my guideline …

By the end of this month, your One Time Budget (KLE 25) will tell you what you NEED to spend money on. And, if you are meeting your current Pay Yourself Twice target (be it 1% or 15% or somewhere in between), have your debt under control (we’ll explain exactly what that means in an upcoming Bonus Module), and you haven’t broken the 5% Spending Rule (KLE 32), then:

What you spend the rest of your money on is entirely up to you!

It might be on beer and skittles, or it might be to help a friend or family member out, it might be to sock away under your mattress, or it might be to help a worthy cause.

And, if you do have the ‘donation gene’ (a good gene to have) then you might choose to donate up to 10% of your pre-tax income, or even more …

… because you are financially on track, you have earned the right to choose!

If you have already built up a substantial nest egg or come into a serious amount of Sudden Money (KLE 37), the pressure to give money away – to donate – whether to charity or to friends/family (and, isn’t lending money to somebody close essentially a ‘donation’?) becomes much greater.

Until you have completed this entire Guided Learning Experience, I recommend that you simply don’t donate or give/lend to charity over and above what you can afford out of your spare income on a weekly or monthly basis.

But, be careful about even making those into long-term commitments: keep this giving to a casual week-by-week or month-by-month proposition until you complete every KLE.

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July 6th, 2010
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Comment Number:
1
Written by:
dustbusterz
Posted on:
August 17, 2010 at 5:05 am

This is a very helpful KLE , as I have that helpful spirit(drive). I might be tempted to give more away than perhaps I should at this point. But,yes,waiting(or limiting) till I am near or have reached my goal ,is a smart way to do it.

Comment Number:
2
Written by:
AJC
Posted on:
August 18, 2010 at 6:26 am

They say that charity begins at home; if you are a little selfish now, it’s for the purpose of building your net worth, so that you can give even more later, if you are so inclined as I hope many of my readers are 🙂