30 – Don’t Donate to Charity Until You Do This

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Episode Overview:

Ken hijacks the Cultivation Roadmap to take a quick sidebar about unplanned charity. Unplanned charity is tricky as it pulls directly on your heartstrings as opposed to an impulse purchase. You need to find that fine balance between generosity and managing your net worth. The solution for this is ridiculously simple: plan for the unplanned. Decide for yourself what % income or fixed amount you want to save monthly to go toward giving. Stick to that plan and stay on track.

Transcriptions are auto-generated, please excuse grammar/spelling!

Happy day to you. This is Ken Kaufman, and I am thrilled you’re here for Episode #30 – Don’t Donate to Charity Until You Do This.

Now, I realize what’s happening here. I am completely hijacking the series that I’ve been doing on Cultivate Your Assets, and I think I’m doing it for a good reason. However, it is a bit awkward, so I apologize to those of you who are following this perfectly in this sequence, but I’ve got to stop, and I’ve got to insert this right here. I had a couple of things happen recently that just brought this right up to the top of my mindset and I was just ready to cut a podcast episode on this, and here it is.

Random, unplanned requests come up, it seems like, all the time, to donate to charity or to a charitable cause, or to a family that’s lost a spouse or a child or a sibling, or had some other major tragic challenge come up in their lives, or accident, or things where they really just need some help and support. I want to be really clear right up front. I have nothing against this. In fact, I wish I could help everyone who had these needs.

The challenge is, we all have finite resources and we are left with this desire on one side to help and to use our money to do good in the world, but the other one, which is, we know that we need to be building our net worth and planning for some of our medium and long-term goals so that we can accomplish those things and we can do the things that we’ve set our sights on and dreamed for, whether it’s, we’ve always wanted to take a cruise to Alaska, or we’ve always wanted to, I don’t know, fill in the blank with whatever things you’re excited about. We have to constantly be in this process of saving, and building net worth, and doing these things so that we can accomplish who we’re supposed to become and accomplish the things that we’re supposed to do, and the things that we’re excited about and the things that we’re passionate about, and the things that will feed us in that way.

So, when random requests just show up asking for us to help, well, it pulls on the heartstrings. It’s different than, “Hey, I saw something I really wanted to buy, and so I bought it.” This is at the core. “I really want to help somebody. I want to do good.” Well, here’s the one thing that I need you to do before you donate to any charity, and it’s this. Plan for these random unplanned requests and then stick to your plan. And regardless of what you’re being asked to contribute to and how strongly you feel about it, stick to your plan so that the rest of your building net worth efforts will not get thwarted and your other goals and things that are very important to you, they can still be accomplished, and all those efforts will not be…oh, I hate to use this word, but the one that’s coming to mind is…squandered away. It’s hard to say, when you’re helping someone or helping a charity or an amazing cause, to say your money’s being squandered away, but we have this balancing act that we’re doing because we have these other things and other priorities and goals.

So, how do we do this? How do we plan? Well, it’s really simple. Just decide, right now, what percentage of your income, or a flat-dollar amount, or whatever the right mechanism is for you in terms of your income and everything else, plan an amount, and budget it and save it. If you don’t have a request come up this month, then save it up until the request comes and have that money there and available. My wife and I, we have two categories for giving. One of them is a percentage of our income, and then the other one is a flat-dollar amount. And this flat-dollar amount is what…because the percentage one, we already know where that’s going. We have goals for that, and we spend that and donate that in very predetermined ways, but we have a second category in our budget that is simply called giving. And we have a goal to put a certain amount into that budget every month, and then it builds up, and grows, and accrues.

This is one of the benefits of You Need a Budget, or YNAB. Ahat’s the budgeting software that I’ve used now for years, and I love it. And one of the reasons is because, if I budget, say, $100 or $50 toward giving this month, and I don’t use it, and I do another $50 next month, well, now it carries my balance over from this month of $50, plus the next $50 I put in the next month, so I have $100 now that’s built up there, and it can build and build over time. And the power in this is, now when you get that request, now when that tug at the heartstrings comes in an unplanned random way, and it shows up in your life, and you just know that you need to help that family out with their GoFundMe campaign, or you just really feel compelled with, oh, I don’t know, even Amazon now is asking to round up and pay for charities, you feel compelled to do something like that, whatever it is, you actually have a plan.

Even though the opportunity to donate or the need is showing up in an unplanned way, you have a plan for how to take that on and how to contribute and how to satiate the need to help and serve others around you. We all have it, we all feel that and feel compelled. And some circumstances that people are in or some charities will pull at our heartstrings more than others, but the key thing is, stick to that plan. Have your plan of how much you want to set away and stick to it, and then that allows the whole rest of your financial plan to stay on track and not be thwarted, because those are important things too: the tug at the heartstrings and helping a charitable cause or people in need, that’s super-important, as are all of the priorities that you set up and design. So, just make charitable giving a line item priority in your waterfall that you just decide, “This is what I’m willing to do,” and then, no matter what request comes up, honor what you have committed to yourself, and keep yourself aligned with that waterfall that you built that says, “I only have this much, and that’s what I can give,” or, “That’s what I can donate in this circumstance.”

So, that’s it. That’s what you should do before you donate to any charity, is have that plan, stick to the plan, and be ready for those random unplanned requests that pull at your heartstrings and you just know that you need to help. You’ll have something there waiting for you, and you can use it to satisfy your desire, which comes from a great place. And again, not knocking any charity or the place you’re coming from, but set yourself up to succeed here so you don’t feel like you’re robbing from other parts of your budget, or using things, or feeling bad about money you spent. You know you’ve got the money there and it’s ready for you to use.

Many, many thanks to you for joining today. I promise that I will get back on the track of Cultivating Your Assets, and we’ll be wrapping that series up here shortly in the next couple of episodes. And make sure to subscribe so you don’t miss those and future podcasts. This is a wrap for Episode #30. Happy day.

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About the Podcast

Join Chief Financial Officer Ken Kaufman as he helps you track and hack your net worth. For those seeking financial independence, your net worth is one of the most significant measurements of success. Using his two decades of financial experience, Ken Kaufman helps you overcome your financial obstacles and look onward towards a better, brighter financial future.

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