The idea of giving away all your money may seem extreme, but it’s not a suggestion, spiritual imperative, or socialist fantasy. It’s an inevitable reality.
In life, there are three things you can do with money: spend it, save it, or give it away. With intention, all three activities can create joy and express your values. As the saying goes though, you can’t take it with you.
When you die any remaining assets will be given away, either to your heirs (designated by your will or the state), the ex-spouse you forgot to remove as beneficiary, or charities you appointed. If you’re super rich and didn’t pay trust attorneys to claim you aren’t, the government might get a slice too.
Eventually we are going to give away all our money, whether we like it or not. We may as well do it intentionally and enjoy the benefits along the way.
Giving is Good for Us
While the goal of giving is (ostensibly) to help others, the great news is that giving is also good for the giver. Compared to spending and saving, it’s the most reliable and direct way to use your wealth to buy happiness.
Research studies, philosophers and religious leaders have cited the benefits of giving for centuries. There are countless books and articles on the topic. I won’t bother with a laundry list of citations, but here is a brief overview:
Mental Benefits:
Giving literally causes happiness. It’s been scientifically shown to improve mood, reduce stress and anxiety, release serotonin and dopamine, boost self-esteem, induce feelings of satisfaction, create a sense of purpose, strengthen social connection and deepen relationships.
Physical Benefits:
Giving is associated with lower blood pressure, blood sugar, and LDL cholesterol levels. Studies suggest that it boosts immune function and may increase your lifespan; volunteering specifically has been linked to a longer life.
Giving can help clarify and demonstrate your values; it indicates what is important to you. It can spread happiness too - not only to you and the recipients, but to anyone in your orbit who will encounter your improved, generous self. The act of giving creates a ripple effect of positivity. It should be an important component of every budget.
How to Give
So how much should we give? And to whom? Are small regular gifts more effective than large one-time offerings? Is donating time as good or better than money? Should I give through charities or directly to people I care about? What’s the most efficient way to give? How can I properly evaluate non-profits and their effectiveness?
These are the kinds of questions that can keep optimizers like me from giving much at all, outside of the occasional reactive donation from a fundraising friend or colleague. To be honest, giving is my weakest financial muscle. Saving and spending have always come more naturally. Here are some suggestions that have helped me.
Make it Personal
If you have suffered a personal tragedy or loss, you may have a ready cause that is meaningful to you. Start there and research charities in that area.
Perhaps you benefit(ed) from a program or organization and would like to give back. Maybe you love libraries, the arts, public parks. Many people are motivated to give to their kids’ schools.
Pay attention to the news stories, movies, and themes that tug at your heart strings - or piss you off. Strong emotions signal an injustice or issue you are called to help address.
Consider people in your community. Family and friends are obvious targets, but what about the homeless guy in your neighborhood or the Facebook friend who posted a gofundme? Someone in my family once paid for their housekeeper’s child to go to college. That could feel more meaningful than donating to a scholarship fund at your alma mater.
Make it Mandatory
This is the magic behind the effectiveness of tithing. When giving is considered normal, even imperative, the habit can become as routine as contributing to a retirement account. And like regular saving, the benefits compound for the individual as well as the community.
It might be tempting to automate your donation like you would any other bill, but that could dampen the happiness benefit. Just as spending is more painful when done with cash and in person, giving is more rewarding.
There are several types of giving, some of which may resonate more than others:
Tithing (religious donations)
Personal (direct gifts to family members or other individuals)
Charity (helping the poor, sick, disenfranchised)
Civic (schools, parks, the arts, libraries)
Political (lobbying, donations to politicians or political parties)
Set a giving target and stick to it. You can start small and increase it over time, and it can be a fun challenge to find new ways to hit your goal. Most people think in terms of a percentage of income, but if you are wealthy or retired, it may be more helpful to set a percentage of your annual spending or net worth instead.
Everything is Giving
Every financial act is a sort of gift. Excess savings become a personal legacy upon your death; taxes paid fund communal needs. Even your spending may primarily benefit others (especially if you have minor kids), and ultimately all spending becomes someone else’s income.
Your mindset may matter more than anything. It’s possible to spend selflessly (overtipping, picking up a group tab, paying for vacations with adult kids) and give selfishly (to get a board seat, boost your reputation, or buy political favors).
The lines are blurrier than they appear. Consider an unemployed person struggling in poverty. You could use your wealth to support them in various ways.
Give them cash directly.
Give to a charity that will support them.
Tithe to your church which may provide support.
Pay taxes which fund welfare, food stamps, and other services.
Give the person a job, making their income your expense.
Spend money, causing companies to grow and hire the worker.
Set up a family foundation with your excess wealth which would to support the person, charities, or churches above.
My dad teasingly called me a “rich bitch” for hiring a house cleaner when I was living alone in my 20s. I conceded that paying someone to do what I could easily manage was arguably “lazy and slothful.” But letting her go would deprive her of valued income - money she presumably needed more than I did.
It felt charitable to keep her on. That uncomfortable realization changed the way I view spending and giving. Now I don’t feel guilty when I buy pet food from my neighbor’s store even though I could get it cheaper on Amazon. I buy books instead of using the library because I want writers to keep writing. I have bought things I don’t need to support self-employed friends.
Generous spending doesn’t replace the need for philanthropy, nor does it convey the same psychological benefits. But whatever we are doing with money, the key is to do it cheerfully and with open hands.
There is no perfectly efficient charity; the government will always incur some waste; companies will generally try to exploit workers. But all our money ultimately supports others - many of whom are probably needier and/or more deserving of it.
We are always giving - and voting - with our dollars. Those votes matter more than your political ones, and together they shape the world we live in.
I help people get organized and use wealth to design a life that feels secure and aligned. A former Wall Street banker and CERTIFIED FINANCIAL PLANNER™, I act as an unbiased advocate without selling products or managing investments. To learn more, visit my website.
DISCLAIMER: I love writing about the personal, emotional, and practical sides of money, but please remember that my Substack is strictly for educational and coaching purposes. The insights shared here are general in nature and do not constitute specific investment, tax, or legal advice. While I am a CFP® certificant, reading this does not create an official advisory relationship, and any comments or likes should not be interpreted as client testimonials. For personalized investment advice, please consult a registered financial professional.
Another thing about giving is that it can really be a way to become a more integrated part of your community. Women’s giving circles and LGBTQ giving circles are quite common and great ways to get to know people in your community who care about the things you care about.
The optimizer problem is very real. It’s easy to spend more time trying to find the perfectly efficient use of a dollar than actually giving it. Making generosity a standing allocation rather than a decision you have to keep re-litigating seems like a good way to keep perfectionism from becoming an excuse.