At this point, you’re probably thinking about two questions. First, How much should I give? And second, How do I know whom to give to?
Giving will require revising your current budget to make room for investing in the people and causes you care about. If you’re living on 100 percent of what you make, you’re skating on thin ice. There is no margin for emergencies or the unexpected. In addition, living month-to-month doesn’t give you the flexibility to serve others. Consider cutting unnecessary expenses, like subscription services you rarely use, downsizing, renting out a room in your house, getting a second job, or discussing the guidelines for a pay raise with your boss.
We’ve said this before, but it bears repeating: a life well lived is not determined by your bank account but by how you spend your bank account. Ramit Sethi says, “A rich life is lived outside the spreadsheet.” What’s more, “If we can start giving earlier in life, whether it’s five dollars or fifty thousand dollars, that is a critical part of a rich life.” You can earn more, save more, and give more—all at the same time.
The following giving strategies are great starting points:
Model 1: 80-10-10. Live on 80 percent, save 10 percent, give 10 percent.
If you’re on a pretty strong financial footing—you have consistent income, not a lot of debt, and your spending is under control—Model 1 is for you. Now take 10 percent of your income and start giving it away according to your Generosity Purpose.
Model 2: 70-10-10-10. Live on 70 percent, save 10 percent, pay down debt 10 percent, give 10 percent.
If you have debt you are paying off, Model 2 is great for you. Refer to the debt-reducing strategies listed in Part 1. You want to build up your savings to three to six months of committed living expenses, and then reevaluate your budget. Model 2 requires you to reduce your spending in order to begin saving and giving.
Model 3: the variable option. Start giving 1 percent of your income and then decide how much to save and aggressively pay down your debt. Reduce your spending according to the strategies mentioned in Part 1. You’ll likely never miss the 1 percent you are giving, and the psychological rewards are well worth it. Then increase your giving fund by at least 1 percent per year as you knock your debt down and increase your savings.
Kara and I followed Model 2 as struggling newlyweds who still wanted to make giving to our church and other organizations a priority. As our income increased, we transitioned to Model 1 and have made it our goal to increase our giving every year. We got the idea from a couple at our church just after we were first married. They told us they started by tithing 10 percent of their income, but every year they increased it just slightly. Kara and I have tried to follow their model, increasing our giving each year even if it’s in small increments: 10.1 percent, 10.2 percent, 10.5 percent.
The ultimate giving budget? Aim to live on 10 percent and give away the rest. Let me simplify it for you again in four simple steps:
1. Give 1 percent now. 2. Increase your giving percentage each year. 3. Make giving 10 percent your goal. 4. Aim toward living on 10 percent and giving away the rest.
This week, sit down with your favorite drink, turn on some classical music, and begin to make changes to your current budget. Pick the model that works best for you and your family and write a plan for how to stick with it. Then gather your family around the table, pick your Generosity Purpose, and start giving together.
Now it’s time to put your money into motion. Let’s talk about how.
I know you want to be a good steward of your money and make good choices when it comes to diversifying your investment portfolio. Equally important is to diversify your giving strategy. When it comes to giving, many consider it a one-trick pony. “If I give to the Salvation Army, I can’t give to the local homeless shelter.” “If I give to the animal rescue down the street, I can’t give to Meals on Wheels.” “If I give to my church, that’s enough.” No, it’s not—diversify!
