One Of The Best Kept Secrets To Being Happier
In my book Money Moments: Simple Steps to Financial Wellbeing, I recounted the time when I was facing financial difficulties many years ago. Now I want to make clear, I had enough money to feed and house my family, but there wasn't much for anything else. And I had a lot of debt weighing me down.
Despite (or perhaps because of) my financial predicament, I decided to start making regular charitable donations of £25 a month. It wasn't a lot, but it was a start. I decided to use a charity account because that allowed me to accumulate charitable funds and defer any decisions about making donations until I had a more meaningful amount.
Thinking Beyond Yourself
I remember thinking that my situation could always be worse and that many other people had much worse problems than me. And thinking about which charities to make donations to made me so much more grateful for what I did have. My health, family, friends, work and my ability to earn a living.
In the months that followed business started to pick up, I earned more money, and I started to get to grips with my financial mess. It took me several years to straighten out my finances. But, as each year improved, I also increased the monthly contribution to my charity account.
It might have been a coincidence, but my own prosperity and wellbeing seemed to improve as my charitable donations increased. I'm sure there are a cause and effect at play!
“The things you do for yourself are gone when you are gone, but the things you do for others remain as your legacy.”
Kalu Ndukwe Kalu Nigerian-born American political scientist
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With more money in the charity account, each year we gave more money to worthy causes. We also got our children to do research to help us decide which charities to donate to. This enabled us to demonstrate to our children our values and the importance we place on civil society and altruism.
I love teaching everyday people how to improve and maintain their financial wellbeing. I also enjoy the consulting I do with a small number of wealthy families each year, helping them prepare their heirs for their inheritance. But the activity which will bring me even more pleasure and purpose in 2021 and beyond, is to significantly increase the amount of money I give to charity.
I intend to direct a larger proportion of my future earnings to charitable giving. This will help make a difference to others, both in the UK and abroad, and it will give me even more motivation to keep working. But my level of giving won't be anything like the $4 billion that Mackenzie Scott (the ex-wife of Amazon founder Jeff Bezos) gave away to charities and aid organisations in just four months last year, but it will be meaningful to me. It will also bring me greater happiness, joy and fulfilment.
Charities Matter
We can argue whether we should need charities in a modern, developed and prosperous country like the UK, but we have to deal with the world as it is, not as we'd wish it to be. Charities have been around in one form or another for hundreds of years. Most fulfil a range of socially useful roles in society. Whether it's operating the local food bank, fighting for housing rights for vulnerable people, or lobbying governments about climate change. Charities fill in many social gaps.
Charities need money to do their work. But the pandemic has stopped many of their fundraising activities just when demand for their help has increased.
Tax Incentives Are Helpful
As in many other countries, there are very generous tax benefits for charitable giving in the UK. Cash gifts attract a 25% bonus if you pay income tax, as well as additional tax relief for higher and additional rate taxpayers). Gifts of assets are income tax deductible and it also avoids any capital gains tax and inheritance tax that might apply. This government website has more detailed information.
Tomorrow Never Comes
When you get to grips with your money, you can clearly be more generous (Money Milestone 8). But unless you are struggling to buy food and keep a roof over your head, don't let that be an excuse to wait until the time is right. Just make a small start, as I did all those years ago, and then you can increase your giving as your situation improves.
I'm doing my small bit to help charities fill those critical social gaps. The question is, are you?
Warm regards,
Jason