Giving: Planning to be Spontaneous!

You know the three budget categories: Give, Spend, and Save.

Giving is an important part of overall financial health.  Whether your giving is based on a religious belief, a passion for a nonprofit, or empathy for a hurting family, sacrificing a portion of your wealth brings balance to your life.

In the past, our family set a Giving budget in January and automatically sent checks through our BillPay system. But during the year, I would hesitate when a local group had an emergency funding campaign or my heart wanted to help a friend in crisis.  What would this do to my household budget?  Could this desire to help really end up hurting me at the end of the month?

This year, we set-up a system to give more money and be spontaneous without worrying about upsetting the household budget.

Charitable Checking Account

The Sinking Fund concept is one of our family's best financial planning tools.  We have nearly a dozen savings accounts for specific goals - next vehicle, next tuition payment, house down payment, next vacation, etc. Our bank allows us to put a nickname (Next Car) on the account instead of keeping track of all those different numbers and their purposes - giving every dollar a name. Each payday, an automatic transfer is made from our main account to each of these special accounts.

To reach our new giving goals, we opened a separate checking account just for charity and nicknamed it the Donations Account. This isn't one of those fancy charitable trusts that helps shelter contributions during the tax year without having to designate a beneficiary of the funds until the future. This is a simple checking account at our bank, with a separate set of checks, that will only be used for donations.

Why did we do this?

I'm an accountant by trade. I understand budgets, tracking, income and expenses, etc.  At home, I make most of family finances easy and automatic - my free time is for quilting! I wanted to be accountable to our new giving goals without having to be an accountant at home all the time.

To reach our new giving goal, I looked to past financial successes: When we prioritized retirement savings - we automatically transferred that amount on payday to the retirement account.  We never saw the money - we never missed it - we adjusted our household spending because the goal was important. 

Checks are written now and later

With this new dedicated checking account for our donations, I can automatically transfer our giving percentage over each payday and separate it from our household expense account.  

No worries about overdrafting the main checking account because of an unplanned donation!

The deposits cover the routine monthly donations to the church, a couple of nonprofits, and a few individuals. The excess is available for those unexpected giving opportunities for the neighbor’s Boy Scout project, a friend who has an unexpected medical expense, or a charity that needs a quick boost.

Only nine months into our new system and we are seeing amazing results:

$ We are giving so much more than in previous years. Our household budget had to downsize to deal with having little less spending money because part of the goal was to give more.  But decreasing a few dinners out and other categories was a small sacrifice compared to the joy that comes from giving. 

Don't you always seem to find more money when you make a detailed budget for something?

$ We are able to start charitable projects that we thought would have to wait until we were either earning more money or no longer supporting our college-age children.  My husband and I received many scholarships from our small community in Kansas when we went to college for our undergraduate and graduate programs.  We are "paying that back" by offering book scholarships to our children and many nieces and nephews who will go to college in the fall.

$ We are able to respond immediately when moved to help a cause or individual.  Instantly, we know how much we have available to give.  Immediately, I can write a check for a family who lost all their possessions in a fire or contribute to a grassroots community project - with no worries about where the money will come from in our household budget.

$ Finally, we are anticipating the joy of distributing the entire remaining balance in December as Christmas gifts to deserving charitable groups and hurting individuals.

Perfect days

Guide Dogs for the Blind uses a John Wooden quote at many of their events: You can't live a perfect day without doing something for someone who will never be able to repay you.  Thanks to this new system of giving through a dedicated checking account, we are going to have more perfect days helping others!

How do you figure out your donations each year?

How do you reach your giving goals?