To give or to save?

A reader wonders how to balance setting money aside for the future with the desire to help those less fortunate

Sharon writes in:

How do you manage the balance between saving for the future and for your own personal goals with a desire to give to those less fortunate than you? It feels like they’re going in opposite directions.

To an extent, this is a struggle for virtually everyone in the first world. Everyone reading this lives well into the upper half of the world in terms of standard of living. We constantly spend money on aspects of a standard of living that far outstrips anything in the lifestyle of the poorest people in the world.

This is a philosophical issue I’ve worked on for a long time in my own mind and I’ve come up with a handful of conclusions about it.

First, it’s not really saving your money that runs in opposition to giving. It’s spending your money with reckless abandon. Money saved in an investment or in a savings account is still yours to use at a later time, but money spent on unnecessary things is money that’s essentially lost to you.

At the same time, the ideas that push me to be a saver are the same ideas that push me to reduce that unnecessary spending. The less you spend on unnecessary things, the more you’re able to save. Alternately, the less you spend on unnecessary things, the more you’re able to give.

So, what about saving versus giving?

There’s no reason not to do both. Many religions, for example, encourage their followers to give 10% of their income to the less fortunate. Other people happily donate to charities of all kinds. These kinds of gifts help to make a difference but don’t cause the people who give to fall into financial hardship to make the donation. They’re very capable of saving an additional portion of their income beyond what they give to charity.

Having some savings means that you have less chance of becoming reliant on charitable giving. This enables the money that’s given to charitable organizations to go to other people who need it instead of you. This is, in itself, a charitable act.

Many large savings goals retain their value when reached. My wife and I are saving for a large home in the country. When we buy that land and build that home, we do so with the knowledge that we will some day be able to sell it and recoup our investment. It’s not lost money.

There’s no reason not to pass on a large portion of your estate to those less fortunate. My wife and I plan to leave behind only small portions of whatever estate we leave to our children and grandchildren and have the rest go to charitable groups. This enables us to protect ourselves while we’re living from draining charitable programs while delivering the wealth we’ve accumulated to charitable programs when we’re no longer around.

Charity is more than just donating money. Time donation is another powerful form of charity. Simply giving some of your hours to fulfill the needs of a charity is a powerful gift. Along those same lines, giving your skills is another powerful non-monetary gift you can give, one that translates into a monetary savings or pathway to more donations for the charity.

When I think about my savings and my charitable giving, I try to think about where exactly each dollar of mine will end up. If I know that there’s a good likelihood that the dollar will remain in my estate for the rest of my life (and eventually be donated after my passing) or be used in some method that will prevent a charity from investing in me, I feel good about how the dollar is used. It’s yet another motivation for me to make wise moves when it comes to what I do with every dollar that comes into my life.