Sept. 7, 2021

2. How much should I donate?


Today’s letter is about deciding how much to donate. Here’s the letter:

How do people decide how much money to give? I'm not religious, so 10% doesn't hold a personal significance to me, so how much should I give?

1. Even if you aren’t religious, you could borrow from those traditions. 

  • The Bible instructs Christians to donate 10% as a tithe. 
  • The Torah guides Jews to give 10%. 
  • Among other donations, the Koran instructs Muslims to donate 2.5% of your wealth (not their income) after you have reached a certain threshold of income, which I think is a very interesting way to think about it as well. It’s interesting that you need to meet a minimum financial security before you are required to give, and also it is interesting that the 2.5% is of your wealth not your income. So in other words, 2.5% of the value of all of your possessions (your retirement savings, your property if you own one). This is so important to the religion that it is one of the 5 pillars of Islam. Actually this is just one aspect of the giving laws in Islam, I highly recommend reading more about this if you have time, different types of wealth are subject to different giving requirements.
  • I read that in Germany, if you have declared yourself a Christian, 8-9% of your income tax is shared among the churches (Catholic, Lutheran, etc). Unless you opt out. So 8-9% of your income tax probably comes out to about 1% of your income depending on your situation.

2. Look at how much you have left after you pay your bills every month. In other words, to look at your disposable income and decide how much you can part with. Personally, I find that kind of an unreliable way to think about it because for most of us, we have debt, e.g. student loans and mortgages. If I had an extra $1k at the end of the month, I would probably drop that into a spreadsheet to see how much that would save me in terms of interest payments on debt. Even without debt, I’m just not sure it is within most of us to give from the leftovers at the end of the month. Kind of like planning your workout for after you “finish everything else.”

3. So that’s why I like thinking about it the other way around by thinking about how much money I put towards other things. For example, do you use your ex’s hbo log in? Well donate that amount every month to a good cause. How much is that? $15/month? Donate that. Personally, I have a little bit of a book habit that I used to spend $150/month on...don’t judge me...but these days, thanks to the public library, I’m now down to $75/month and often much less, so that could be another benchmark. I could donate the $75+ I had already been spending on books.

4. You could borrow from the example of carbon offsets.  You could do the same thing for whatever your vice is. For example, donate however much you spend on cigarettes or fast food or episodes of 90 day fiancee every month.

5. Another way is to ask yourself to look into the future, picture yourself on Dec 31 taking stock of the year you just had. How much would you like to be able to know you donated? And then whatever that number comes out to be, divide it by 12 if you plan to make monthly donations (or if you have the money now, go ahead and send that donation and get it done so you don’t have to worry about forgetting).

6. Another option is just to do what most other people do. I looked for information about how much Americans donate on average, and the estimates range from 2-5%, with some folks, such as those who are religious or who are more advanced in their giving journey, tending to give 10%.

To submit your letter to the show, email spenddonateinvest@gmail.com

Support the show (https://www.buymeacoffee.com/spenddonate)
Transcript

Today’s letter is about deciding how much to donate. Here’s the letter:

How do people decide how much money to give? I'm not religious, so 10% doesn't hold a personal significance to me, so how much should I give?

1. Even if you aren’t religious, you could borrow from those traditions. 

  • The Bible instructs Christians to donate 10% as a tithe. 
  • The Torah guides Jews to give 10%. 
  • Among other donations, the Koran instructs Muslims to donate 2.5% of your wealth (not their income) after you have reached a certain threshold of income, which I think is a very interesting way to think about it as well. It’s interesting that you need to meet a minimum financial security before you are required to give, and also it is interesting that the 2.5% is of your wealth not your income. So in other words, 2.5% of the value of all of your possessions (your retirement savings, your property if you own one). This is so important to the religion that it is one of the 5 pillars of Islam. Actually this is just one aspect of the giving laws in Islam, I highly recommend reading more about this if you have time, different types of wealth are subject to different giving requirements.
  • I read that in Germany, if you have declared yourself a Christian, 8-9% of your income tax is shared among the churches (Catholic, Lutheran, etc). Unless you opt out. So 8-9% of your income tax probably comes out to about 1% of your income depending on your situation.

2. Look at how much you have left after you pay your bills every month. In other words, to look at your disposable income and decide how much you can part with. Personally, I find that kind of an unreliable way to think about it because for most of us, we have debt, e.g. student loans and mortgages. If I had an extra $1k at the end of the month, I would probably drop that into a spreadsheet to see how much that would save me in terms of interest payments on debt. Even without debt, I’m just not sure it is within most of us to give from the leftovers at the end of the month. Kind of like planning your workout for after you “finish everything else.”

3. So that’s why I like thinking about it the other way around by thinking about how much money I put towards other things. For example, do you use your ex’s hbo log in? Well donate that amount every month to a good cause. How much is that? $15/month? Donate that. Personally, I have a little bit of a book habit that I used to spend $150/month on...don’t judge me...but these days, thanks to the public library, I’m now down to $75/month and often much less, so that could be another benchmark. I could donate the $75+ I had already been spending on books.

4. You could borrow from the example of carbon offsets.  You could do the same thing for whatever your vice is. For example, donate however much you spend on cigarettes or fast food or episodes of 90 day fiancee every month.

5. Another way is to ask yourself to look into the future, picture yourself on Dec 31 taking stock of the year you just had. How much would you like to be able to know you donated? And then whatever that number comes out to be, divide it by 12 if you plan to make monthly donations (or if you have the money now, go ahead and send that donation and get it done so you don’t have to worry about forgetting).

6. Another option is just to do what most other people do. I looked for information about how much Americans donate on average, and the estimates range from 2-5%, with some folks, such as those who are religious or who are more advanced in their giving journey, tending to give 10%.

To submit your letter to the show, email spenddonateinvest@gmail.com
To support the show visit buymeacoffee.com/spenddonate