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Are Charitable Contributions "Savings"?
01-18-2013, 04:33 PM
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#1
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Recycles dryer sheets
Join Date: Jan 2013
Posts: 118
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Are Charitable Contributions "Savings"?
I want to know how others view this. Personally, me and the dw give to several different missions/churches/organizations that amounts to 10% of my after tax salary. When I see super high savings rates on these and other forums, I try and justify my lower savings rate by adding the 10% to whatever I saved in cash/401k/roth/etc. Does anyone else who gives feel the same way as me?
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01-18-2013, 04:37 PM
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#2
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,022
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Charitable contributions are an expense (spending), not savings.
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Numbers is hard
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01-18-2013, 04:51 PM
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#3
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Recycles dryer sheets
Join Date: Jan 2013
Posts: 118
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Quote:
Originally Posted by REWahoo
Charitable contributions are an expense (spending), not savings.
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What I meant to say, I guess, is that it seems that maybe it should be noteworthy when talking about savings rates and personal financial situation in general. I guess it is because I come from the dave ramsey school where I divide my finances into three categories giving/spending/saving(investing). To often, it seems like the first two are bunched together and many forget to break them out.
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01-18-2013, 05:03 PM
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#4
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2005
Posts: 10,252
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Giving is Spending. Why should they be broken out?
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01-18-2013, 05:03 PM
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#5
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Moderator
Join Date: Feb 2010
Location: Flyover country
Posts: 25,362
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Money you put away for your retirement (or estate) is saving. Everything else, including taxes, is spending.
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01-18-2013, 05:26 PM
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#6
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Thinks s/he gets paid by the post
Join Date: Sep 2010
Location: midwestern city
Posts: 4,061
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+1.
Quote:
Originally Posted by braumeister
Money you put away for your retirement (or estate) is saving. Everything else, including taxes, is spending.
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Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
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01-18-2013, 05:31 PM
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#7
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,374
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Quote:
Originally Posted by AndrewJackson
I want to know how others view this. Personally, me and the dw give to several different missions/churches/organizations that amounts to 10% of my after tax salary. When I see super high savings rates on these and other forums, I try and justify my lower savings rate by adding the 10% to whatever I saved in cash/401k/roth/etc. Does anyone else who gives feel the same way as me?
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No, but if it make you feel better about your savings rate, go for it.
What you might need to think about is some of those super savers may make charitable contributions as well but I would concede that I doubt that many of the high savers contribute 10% of their after-tax income.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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01-18-2013, 05:31 PM
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#8
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Recycles dryer sheets
Join Date: Jan 2013
Posts: 118
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Quote:
Originally Posted by braumeister
Money you put away for your retirement (or estate) is saving. Everything else, including taxes, is spending.
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I guess I just put giving in with savings because usually only FI people can afford to give. I have never heard anyone say that they are poor and getting no where in life because they gave above their means. That is all I am trying to get at.
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01-18-2013, 05:50 PM
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#9
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,374
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Quote:
Originally Posted by AndrewJackson
I guess I just put giving in with savings because usually only FI people can afford to give. ...
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I don't agree with this. I have regularly made charitable contributions ever since I graduated from college and during that time I was poor, ok and then later FI. I think there are plenty of folks who are not FI who regularly contribute to charity.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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01-18-2013, 05:57 PM
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#10
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Recycles dryer sheets
Join Date: Jan 2013
Posts: 118
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Quote:
Originally Posted by pb4uski
I don't agree with this. I have regularly made charitable contributions ever since I graduated from college and during that time I was poor, ok and then later FI. I think there are plenty of folks who are not FI who regularly contribute to charity.
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True, but most of the time (at least in my experience), they are on the path to FI.
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01-18-2013, 06:06 PM
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#11
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Full time employment: Posting here.
Join Date: Apr 2010
Posts: 853
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DW and I save about 40% - 50% of our gross income every year (including 5% employer match). We also give a tad over 10% to our church. We always have (even when we were "poor"), even when we were little, and will always continue to do such.
I don't count "charitable" contributions as part of my savings rate.
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01-18-2013, 06:10 PM
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#12
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Recycles dryer sheets
Join Date: Jan 2013
Posts: 118
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Quote:
Originally Posted by ronocnikral
DW and I save about 40% - 50% of our gross income every year (including 5% employer match). We also give a tad over 10% to our church. We always have (even when we were "poor"), even when we were little, and will always continue to do such.
I don't count "charitable" contributions as part of my savings rate.
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Wow! That is inspiring. You must have amazing control on your expenses. With taxes, you must only spend on yourself 20-30 percent. Nice.
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01-18-2013, 06:12 PM
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#13
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Recycles dryer sheets
Join Date: Aug 2008
Posts: 251
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My mother lives on less than $1500/mo SS and still considers that the "income" on which she calculates her 10% charitable giving...
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01-18-2013, 06:35 PM
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#14
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Thinks s/he gets paid by the post
Join Date: Sep 2008
Posts: 2,171
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Are charitable contributions savings? Only in the sense in which they are "storing up treasures in heaven, where neither moth nor rust corrupt, nor thieves break in to steal".
On the terrestrial plane, they're an expense item. For "feel-good" purposes, perhaps you could think of yourself as "spending only x% of your income" (that is, gross income less savings and contributions), rather than considering your giving as savings.
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01-18-2013, 06:53 PM
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#15
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2005
Location: Northern IL
Posts: 26,896
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Because you are spending money on charities, it makes sense that your savings rate would be lower than someone who spent less/zero on charities, all else being equal.
But whatever you want to call it, 'spending' or 'giving', it isn't saving, unless you are sure they are going to give it all back (plus investment returns) if you need it in retirement. But then, it isn't 'giving', is it?
-ERD50
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01-18-2013, 07:14 PM
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#16
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Thinks s/he gets paid by the post
Join Date: Oct 2006
Posts: 4,629
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It's not savings.
But, when I do retirement planning, I think about "worst case" scenarios. As I imagine myself cutting back if things go badly, contributions is one of the things that gets cut.
So I do put it in the category of "target, but not bare bones" spending.
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01-18-2013, 07:50 PM
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#17
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Thinks s/he gets paid by the post
Join Date: Feb 2011
Posts: 1,797
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Quote:
Originally Posted by AndrewJackson
......I have never heard anyone say that they are poor and getting no where in life because they gave above their means. That is all I am trying to get at.
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Actually have run across a number of folks like that, although they may not realize it. Give so 'generously' that they end up needing assistance from same (or other) charitable organizations they originally donated to. One lady gave so much of her meager wages to church that she had no $$ left for unexpected car repair. No transportation led to loss of job & she was back at the same church for 'emergency' aid. Admire the generous spirit, but seems to me that all (both she AND the church charity) would have been better off had she saved/budgeted some for rainy day fund. As they teach in basic rescue- you are no good to the guy in trouble if you end up needing rescue yourself.
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01-19-2013, 05:44 AM
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#18
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2006
Location: Washington, DC
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The only reason I can see to distinguish giving from other expenses if you feel you could cut that giving in a crunch. But, even then, it is simply an optional expense, not savings. Other than in that "building your crown in heaven" sense someone else mentioned.
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Idleness is fatal only to the mediocre -- Albert Camus
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01-19-2013, 07:35 AM
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#19
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Thinks s/he gets paid by the post
Join Date: May 2005
Location: Texas
Posts: 1,038
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Charity begins at home
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01-19-2013, 09:15 AM
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#20
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2006
Location: west coast, hi there!
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Quote:
Originally Posted by AndrewJackson
I want to know how others view this. Personally, me and the dw give to several different missions/churches/organizations that amounts to 10% of my after tax salary. When I see super high savings rates on these and other forums, I try and justify my lower savings rate by adding the 10% to whatever I saved in cash/401k/roth/etc. Does anyone else who gives feel the same way as me?
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Some of your giving does come back in a tax deduction assuming you do itemized deductions. So if you give 10% of your after tax salary and you are in the 25% marginal tax bracket, you get back maybe 2.5% in taxes. Now do you save that part of the tax break or spend it?
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