Setting aside money for philanthropy

There are many things worth saving your money for, and most of them likely coincide with your goals. While it is common for people to think of goals as items or situations that would better their lives, they do not have to come in form of purchases.

Giving to charity and helping those in need can be admirable, life-changing goals as well. If you identify with or are passionate about the circumstances that a particular organization stands for, then helping an organization can fit nicely within the realm of your goals.

On a personal level, the ability to give back is a powerful place to be in. It instills confidence and puts you in better control of your finances. But like many things in the financial world, there are some misconceptions about philanthropy. The biggest one is that you have to be wealthy to give.

You do not have to be rich to be philanthropic

The notion that only the wealthy can give to philanthropic causes is just not true. Sure, you have likely seen the names of big-time donors who have invested great sums of money to a cause. Perhaps they even earned their name on a building for their generosity. And while their gift is reflected in an outward way, they’re far from the only people giving.

The point is not to have your name on the outside of a building, but to make a difference. If you want to give to a charity or a philanthropic cause that you identify with, then make a plan of action today. Your ability to give comes from proper money management, not from being wealthy.

Start with your budget

You have heard it before, but it is time to hear it again. If you are looking to set aside money for a cause, you need to incorporate it into your budget, especially if this is something you plan on making into a habit.

Remember, a budget is your financial roadmap. Anything and everything you want to spend your money on should be mapped out in this budget. And by having this money earmarked ahead of time, you can give with the confidence of knowing this donation is not negatively affecting other aspects of your financial life.

Additionally, planning ahead gives you the time to donate a meaningful amount as opposed to the extra cash you have on hand at any given time. Prioritize charitable giving by making it a goal to save for.

Identify and invest with your goals

When choosing a cause, make sure it is something you feel strongly about. However, make sure you do your research. If there is a cause you want to help, take a look at the various organizations involved in furthering that cause. For starters, you might be surprised to find out there are more than you initially realized. And while you have your reasons for selecting a particular charity, it is always a good idea to verify how the organization is using those funds. After all, you want the maximum amount of your donation to go toward the cause you are giving to.

While giving donations to philanthropic causes is noble, think about where your investment dollars are going. For instance, if one of your passions is a cleaner environment, what about investing money into a company that makes use of green energy as part of their company mission? Or maybe they are leading the global charge in their internal recycling efforts?

While this is not the same as giving money to a philanthropic cause, it is a way to still support the ideals that resonate with you, and grow your money at the same time (though, it’s worth speaking to a wealth management team to assess any risk incorporated with investing your money).

Stay in control

While you might not think of it this way, giving to charitable causes puts you in better control of your money.

By working with your budget and establishing a certain amount to give, you will spend the rest more wisely. You have started the practice of more closely aligning your spending and saving efforts with those things that matter most to you.

While saving for philanthropic causes, don’t lose sight of your other savings efforts. Keep everything that is important to you on your roadmap, and start planning for it today.

Sources:

“How to Make Charitable Giving Part of Your Budget,” Real Simple, May 2020

https://www.realsimple.com/work-life/money/money-planning/how-to-budget-for-charitable-giving