This blog post was written by Student Advisory Council member, Ryan Leung.
With the holidays coming up, there is no better time to make a plan for charitable giving. While it may sound simple, even for the most charitable of people, giving requires careful planning to form a habit. After all, setting aside money for donations can be easy to forget, and money won’t always be available when you most want to give. This is where proper budgeting comes in!
Budgeting for Giving
Incorporating funds for charitable giving into your budget means you can be organized about giving the amount you want, when you want, and where you want. A common budgeting rule of thumb is the 50/30/20 split – 50% for essentials such as housing, electricity, and food, 30% for wants, including vacations, dates, or gifts, and 20% for savings and paying debts. Adhering to this budgeting split, charitable giving would come from the 30% for wants, and a common allocation to charity is spending a third of this (10% of overall income) to charitable giving.
It is important to look out for yourself and your dependents, so make sure you have at least three months of savings and have paid off high-interest debt such as credit card balances before working donations into your budget. You should never be pressured to give to charity if your financial needs aren’t met first. If funds are tight, an alternative budgeting split is to do 80/15/5, with 5% of your total income assigned to charity.
Regardless of what percentage you decide to allocate to charity, having a number pinned down provides a useful benchmark for accomplishing your giving goals and makes giving easy and stress-free – as it should be!
Splitting the Giving Budget
Once you’ve decided on an amount to set aside for giving, it can also be challenging to decide how to split the money among different charitable causes and organizations. That 50/30/20 number comes into play here too! The 50/30/20 rule is a great rule of thumb that suggests you allocate 50% of the funds you’ve set aside to causes you are most passionate about, 30% to causes that you want to donate to out of affiliation (such as religious groups, community charities, alumni associations), and 20% for spontaneous giving.
Many charities also allow you to set up monthly donations, which takes the hassle out of giving and makes sure your chosen organization gets the funds they need on a monthly basis. Additionally, it is important to know if your employer has a matching program in place. This can help amplify the impact of your donation. By thinking ahead and having categories for donations, but also staying flexible, you can put your money to good use and have the largest possible impact.
Other Ways to Give
Whatever amount you decide to put into the budget for charitable giving, the most important thing is that you are contributing to great causes. Remember, money isn’t the only way to give; check out this blog post for ideas for how to contribute your time and other non-monetary resources.
If you’re thinking of setting up your budget for giving and are not sure what organization to donate to, HUECU is doubling all donations up to $2,500 throughout the month of November to our local Children’s Miracle Network Hospital, Boston Children’s Hospital. You can click on this link for more information about the Children’s Miracle Network, and this link to give! If you’re a member of HUECU, you can also make a donation directly through our Online Banking portal.
Happy giving!