Jan. 27, 2023

When Should I Start to "Give Back?"

When Should I Start to

How to do good while doing well.

When should I prioritize giving back alongside my long-term financial goals? Should I do it via a lump sum or space it out over the long haul?

Welcome back to #RichGirlRoundup, The Money with Katie Show's weekly segment where Katie and MWK's Executive Producer, Henah, answer your burning money questions.

Watch their full conversations here: https://www.youtube.com/playlist?list=PLHvvquEbj_eVTRet6cw2ZzhDux3lybWS8.

New episodes every Friday. Each month, we'll put out a call for questions on the MWK Instagram (@moneywithkatie) and select a few to answer.


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Katie: Welcome back, Rich Girls and Boys, to the Rich Girl Roundup weekly discussion of The Money with Katie Show. I'm your host, Katie Gatti Tassin. And every Friday, my executive producer, Henah, and I are going to artfully debate an interesting, relevant topic based on a listener question. So you'll start to see that second weekly drop right before the weekend, give you a little something to nibble on, and then you'll get to hear someone else's voice and hot takes. So before we dive in, here's a quick message from the sponsors of this segment.

This segment is brought to you by Betterment, the online investing platform that gives you the tools, inspiration, and support that will help you become a better investor. Investing involves risk. Performance, not guaranteed. 

Henah, I have a feeling this week's question is gonna be really close to your heart. 

Henah: It is. So I have a background in social impact and nonprofit work, and I'm very excited to dig into it, and especially because you and I have talked about this a lot. Can I read this question?

Katie: Tell the people what we're working with. 

Henah: All right, world. Next week's question is from Dani. “When do you start contributing to charitable endeavors? After I have maxed out my 401(k), HSA, and IRA, should I be thinking about causes to support? I feel stuck between not saving enough for early retirement and also not using my good fortune to support others, and feeling a little slimy in not giving/sharing.” Katie, you wanna start us off? 

Katie: You're like, I'm gonna punt it to you to give the “devil on your shoulder” advice first. No. Yes, Henah has a very angelic POV here, but I do appreciate how honest this question is, 'cause I think it captures a very real dilemma that is worth unpacking a little bit. Because it highlights that, you know, your emotions about money are often highly uncorrelated to the amount of money that you have. And I think we tend to assume that, “Oh, when I'm older, when I have more money, I'm gonna become more charitable, when I'm rich and stable,” but it's kind of true that money is just a magnifier; it does tend to amplify our existing habits rather than fundamentally change us. So I don't know, I think that there's something in this question that sticks out to me, just around the sense that it really feels like Danny is feeling pulled to give, which I think is an instinct worth listening to. 

Henah: Yeah, I agree. I think when you were talking about amplifying our existing habits, one of the things that you and I have talked about is building in these habits early on, and that it's a lot easier to start a habit or start at the first paycheck, get the 10% taken out, and then you're not having to think about it later, because it's much harder that way. And to the extent that this person's asking about, “When can I start contributing?” The earlier you start and you add up your philanthropic contributions from the get-go, the easier it is for you to give back without feeling like you're not doing enough for early retirement or your other money goals. And I would argue that if they're already maxing out their 401(k), HSA, and IRA, they're probably hitting all their money goals, right? 

Katie: Yeah, I would say you're probably in pretty excellent shape. You're probably at a position where I would say you're certainly, from a financial standpoint, stable enough to start giving back. But to your point, Henah, about starting small and just building the habit, I think there's maybe this assumption or this feeling like, well if I'm not gonna give hundreds of dollars or thousands of dollars that it doesn't matter. But I know you've taught me that when you give in an ongoing way, like in a predictable way, and you have a recurring donation, even if it's small, just having that reliable cash flow can be very, very beneficial for organizations. 

Henah: Yeah. So I used to work in fundraising and development at nonprofits, and we would joke, you know, like $50 one time is less important than $5 every month, which might seem counterintuitive, but it's money that we as the nonprofit could then plan for, and it would be sustainable, but it also wasn't breaking the donor's bank. And so yeah, I do think that the more someone can plan for stability in their own budget and for the cause, the better.

One thing that you and I have talked about as well is kind of reframing what charitable giving is, so that it's not just this thing that I'm not investing in myself. You actually are investing, it's investing in the world you want to live in, and it's a way to invest in your communities and spread your good fortune to become their good fortunes too. 

Katie: Yeah. 

Henah: So I know you personally are drawn to the cat shelter that Sam was adopted from, right? 

Katie: Yes. SPCA Texas, shout out. It's like the Ritz Carlton of shelters, you know, obviously, 'cause it produced such a majestic king like Sam. But yeah, I love giving to causes that benefit animals. I always have. I remember fundraising for the ASPCA when I was a kid, like going door to door and asking my neighbors for money to send to them. But yeah, I think there's probably something that you already feel strongly about. 

I would also say that if someone is listening to this and they're like, “Ooh yeah, this appeals to me, but I am not contributing the maximum to my retirement accounts. In fact, I'm behind. What should I do?” I think that it's also probably worth acknowledging a few different things here. And that's that you can give in a way that is not financial. Like you can give of your time. You could plan to build charitable giving into your early retirement plan, so that as you are investing lump sums of cash early in life, you are effectively building an income stream for later, and you can earmark part of that income stream in perpetuity for charitable giving. So even if you're like, “I'm not in a position yet where I feel like I could do this,” even by investing for yourself now, you are setting yourself up to have that type of optionality later. 

And even Dani mentioned she wants to early retire, so maybe she's gonna retire when she's, I don't know, 40, 45. All right, sick. Use the next 30 years to find a cause that you wanna get involved with, and volunteer on a weekly or biweekly basis. So I think there are multiple ways to think about this outside of the traditional perspective of like, “I'm gonna give $500 a month to a particular cause.” 

Henah: Yeah, there's the percentage of your income that we talked about and building that budget line item. Another one is like estate planning and working on your will early. If you're in your twenties and thirties and you have sizable investments, that's another one. We had a lot of folks who did that when I worked in nonprofits. You could donate stocks, you could donate crypto, you can donate in-kind stuff. So you may have a bunch of clothes you can donate that are in great condition. So I think, to your point, it doesn't have to be monetary contributions. It can be time, energy, or even just deferring those things until you have a long runway where that becomes your sole focus. So props to Dani, though, for considering this angle even in the first place. 

Katie: I love that she was like, “I feel slimy.” I was like, I honestly relate. I remember feeling the same way when I got to the point where I was like, “I very easily could be giving and I'm not. So how can I change course?” So I think recognizing that and listening to the instinct is huge. 

Henah: I agree. 

Katie: Thank you for listening to this week's Rich Girl Roundup. We will be back next Friday covering credit card points. So we're taking a hard pivot from charitable giving to travel rewards: how to use them, maximize them, and how Henah and I divvy up our own points.