Hey there! We are about to enter the Holidays and so I thought it was a good opportunity to hone in on giving; how we can build giving into our budget, how we identify where to give, and the tax benefits of giving.
- How do you build it into your budget?
If you are somebody that really wants to give but never really feel like you can, because you live paycheck to paycheck, I would encourage you to sit down and look at your budget. We’ve talked about how to budget before in previous videos, about identifying every single dollar, giving is one of those things that goes in on the fixed side of your expenses. If it comes out first you will find that your discretionary expenses will just adjust, they will have to. The same way we add in gym memberships or new car payments, your regular other spending will adjust to what you identify as your fixed expenses. So that’s first, how do you build it in? You build it in by making it one of your fixed expenses.
- How do you get started?
Sometimes you may have a goal to give 10% of your income but that seems like a really big number! I would encourage you to start off small. It’s not a race to see how fast you can do it, you want to build it in maybe starting with $25 bucks a month. Start giving $25 bucks a month, do that for a month or two months or three. Then increase it to $50 bucks a month and do that for a little bit and then increase it to $100 bucks a month and do that for a little bit and you might find that you never missed the $25 you don’t miss the $50 you don’t miss the $100. If you stairstep yourself into it, this is same way we can approach saving, but if you stairstep your way into it before you know it you may be at your 10% goal! It may take you a year to get there and that’s OK but at least you get started with something and it’s building the habit in the process.
- Where do you give?
There are lots of ways you can give your finances. We believe giving is of our first fruits, you may be in the boat where you want to give to your local church, that’s always a good option. The other areas you can give is to other nonprofit charities, they run off of giving. There’s tons here in the Houston area there’s tons all over the country, all over the world, that you can give to. I would encourage you to do your research and make sure that the dollars that you’re giving are actually used the way you want them to be used in supporting that organization. Sometimes it’s just giving to your neighbor. Maybe you might find out that a friend of yours lost a job or there was a medical emergency and there are some high medical bills. You may have the opportunity to just outright gift to somebody. For some reason this has become such a taboo thing in our culture, I don’t think it actually is, actually it’s been this way for a long time!!! We don’t talk about money with our friends, we don’t talk about when we’re struggling! If you’re in that position I would encourage you to be open and share with those around, you because you may find that people want to support each other we want to come around and encircle each other and lift each other up when they’re struggling.
We’ve talked about all the different places where you can save, how you begin saving, and how you build it into your budget.
- What about Tax Impact?
The last piece of I want to talk about because we are in financial planning and taxes do impact everything. There are still tax benefits to giving, now a couple years ago they changed the standard deduction, I realize I’m speaking some foreign language to you, but they updated the standard deduction; That’s how much you can deduct off of your taxes, so if you’re single it’s a specific dollar amount if you’re married it’s about double and if your head of household it’s a slightly different number. That number was increased years ago and what ended up happening is a lot of people stopped giving because they realized that they would have to get so much more to actually take the itemized deduction, which is away if you have extra giving if you have high interest on your mortgage if you have lots of sales tax you can hide medical expenses those types of things go on an itemized deduction, so if you actually are giving a significant amount of money you can still take the itemized deduction, it’s just a bigger number no. So unfortunately, what we saw is people realized they could take the standard deduction and had no need to give anymore and that’s such a shame because there are so many organizations out there that depend on those giving dollars.
As I mentioned at the beginning, I know we’re getting into the holidays, I know giving is at the forefront of your mind. If you’re interested in figuring out how to build giving into your budget and you need some help with that give us a call 832-856-2825. We would love to sit down with you and help you build that out!
Next Step Financial Transitions, I can’t wait to hear from you!