Budgets are an important component of personal financing. Without a thorough understanding of the rate of money going in and out of their bank accounts, people cannot accurately assess their potential for spending and saving. Budgets are also handy for paying off debt and planning for the future. Those who budget may find they have more money to devote to leisure or other worthwhile endeavors, such as donating to charity.
Establishing a charity budget makes it possible for people to focus on doing good and helping others. Charitable giving also comes with the beneficial side effect of establishing extra tax deductions for some individuals.
Many people only think of charitable giving at the end of the year, when the holiday season tends to inspire philanthropy. However, many people’s end-of-year finances are already stretched thin thanks to holiday shopping and entertaining. As a result, men and women who wait until the end of the year to donate may not be able to be as charitable as they would like. That’s why focusing on charity as part of a yearly budget can stretch dollars even further.
Establish a giving level. By examining their finances, people can get a better picture of how much money they have for discretionary spending, including charitable giving. However, income alone may not dictate just how charitable a person can be. For example, according to a McClatchy analysis of U.S. Bureau of Labor Statistics, the poorest Americans often donate larger percentages of their incomes than their wealthier counterparts. Generally speaking, the typical amount most people aspire to donate to charity ranges from 3 to 10 percent of taxed income.
To make a charitable giving budget work, consider these tips.
• Make a list of charities that have meaning to you. If you do not have specific choices, select categories, such as politics, education and community, and then go from there.
• Assess your giving ability in dollar value. Be sure charitable giving does not come at the expense of necessary daily living.
• Divide the available funds against the charities selected.
• Set aside specific times of year that you will make the donations so as not to feel burdened at any one time of year.
• Leave an emergency fund for donations that cannot be planned, such as diaster relief or to help someone with medical bills.
• Sign up for recurring payments for yearly giving to take the work out of remembering to give. Other organizations can distribute donations to the kinds of charities you prefer, making giving even more automatic.
Budgeting for charitable giving enables greater year-round control of funds for beneficial purposes.