Daughter asked for advice and I’d like to solicit opinions of wise CC parents. During her college years, D was actively involved with a student non-profit, served as a chair, was responsible for budgeting, organized massive fundraising events etc. She continues donating to this organization after college, and serves on the board. She also belongs to a group of young people who review proposals and sponsor small local nonprofits using their personal donations. And she volunteers in a local mentoring programs. During the recent visit, she told us that she felt she did not do enough and wanted to increase her charitable contributions. She uses “the Life You Can Safe” and similar resources to research the most impactful, cost-effective, and transparent charities. And she asked us to help her estimate a reasonable amount to donate.
D is a young professional who makes a very good salary allowing her to live comfortably. She has no college loans or other financial obligations, rents a nice, but small apartment together with her BF. She is not exactly frugal, but has pretty conservative spending habits: not interested in expensive clothing, bags, shows, jewelry, grooming etc, has no car, but does pay for her gyms / exercise classes, mid-range vacations, occasional inexpensive restaurants, professional office attire etc. Her savings are quite large for her age group, however, she still needs to save and budget for the future, which may include paying for a wedding, buying a house and a car, raising and educating children, funding retirement etc.
I am very proud of my daughter, and I support her goals. However, I don’t want her to live on ramen noodles and feel guilty about spending every discretionary dollar. And I also want her to be prepared for the future. So, a part of me wants to tell her to save every dollar to take advantage of compounded interest while she is still so young. And another part of me wants to tell her to go ahead and save a few lives today through increasing her (already very substantial) donations. She is not at all unreasonable or naïve, and she does understand the need for proper balance. She just does not know how to find this balance between day-to-day discretionary spending, saving, and donating to charities (which is very important to her), especially being so young and not knowing what future holds. I would love to hear other people’s thoughts.
I think it’s great that she’s making monetary contributions but agree that saving is also important. Does she have time to volunteer? I think there are many organizations that would welcome the skills and passion of a 20-something person.
She does volunteer in several capacities, but her workdays can be extremely long, and may include weekends, and her schedule is very unpredictable. Plus she does lots of business travel, which is also somewhat unpredictable. And she has some chronic health issues with low stamina. So, she participates in a mentoring program for inner city students, which does involve one-on-ones, but also lots of online work and interactions. She was just telling us recently how much she likes this option because it allows her to be more flexible.
I’ve always liked the idea of tithing, that is donating 10% of one’s income to charity. As one’s income fluctuates so can one’s giving. We all need to save for various things at various times so I’m not sure I’d want to put off giving until some imagined future when it became easier. One of the nice things about giving when young is that it sets a pattern and you adjust your budget to include charitable giving.
Of course if your kid’s budget is tight you could encourage them to tithe based on after-loan or after-essentials income, IOW 10% of discretionary spending could go toward charitable giving.
Tithing is a biblical concept but one followed by many Godless heathens like me.
I also have to say Bravo! to you for raising a kid who looks beyond herself to consider the needs of the larger world. You clearly did something right.
Kudos to your daughter, @mycupoftea. How impressive of her. Hearing about young people like your daughter gives me hope for her generation’s leadership in the future.
Could you ballpark what percentage of her income she is saving/investing and what percentage she is contributing to nonprofits?
Thank you, @Sue22 , I would like to take credit, but earnestly this kid is pretty strong minded and not easily influenced. I was really happy when she asked for advice - this does not happen very often
I also mentioned to her that 10% of total net income sounds right to me, but now I realize that most people usually refer to 10% of discretionary spending. I think she is already doing the latter, but feels this is not enough.
The classic is she could lay out her full budget and , after fixed expenses, allocate percentages to future (the rerirement tag,) a home, emergency, the discretionary (play, travel, clothes, etc,) and then giving. Nothing wrong with a front-end decision to give 5, 7 or 10%, depending.
If she’s on a board, part of a giving group, and mentoring, that’s a lot more than many. Good that she cares.
Another option is to tie it to long-term savings, either matching her savings or creating some formula to be followed, e.g. “For every dollar I save I’ll put 30 cents toward charity.” It helps to have either a number or a percentage in mind because in my experience volunteering in and giving to nonprofits can become a bit addictive, and while it’s not a terrible addiction to have you don’t want her to get so caught up in helping others that she puts her own financial health in peril.
I think she has some privilege guilt issues, which I can totally understand. She keeps mentioning that all of her friends have college loans (though most of them are now paid off). I also advised her to start by establishing her budget - she just opened mint.com account yesterday.
@doschicos good question! I think she donates about 10% of net discretionary income. It’s more difficult to say what percent she saves, as her income grew continuously over the last few years. That’s why she started mint account
I’ve tithed 10% for relgious reasons from the time I got a $1 allowance at 6 to today on a very good income. I firmly believe if you don’t start when income is low, it’s much harder when income is higher. It’s a great practice and kudos to your daughter. I like 10% to charity and 10% to savings and then you can up from there on both as your financial situation allows.
Beyond the benefits to others, this sets you up from the start of living on less than your income. Right out of college is the time to do this rather than when she’s committed 100% of post-tax income.
Wow, OP, that’s great your daughter is so thoughtful. In a smaller way, I know how you feel. My middle son, 22, is the one who is going to school at the American University of Beirut and volunteering in the Syrian refugee camp several times a week. During school breaks, he’s there almost every day. Eventually, he wants to work in refugee relief full-time.
This is a serious business for him, and different people at our church are supporting him monthly (he has used a lot of it to buy a motorcycle since there’s no public transportation to the camp). There was a glitch with one person’s credit card, and he fell behind in payments by quite a few months. When he realized what had happened, he sent a big check, over $1,000, to make up for the missed months. My sweet son told me, “Mom, I’m going to donate all of it to a family in the camp who is really struggling.”
While I appreciate his largess, I reminded him that he will need to save money for the summer months, when his dad and I aren’t supporting him (we pay for college tuition, room and board, but just while he’s attending school). He is not allowed to get a job in Lebanon, so he needs to plan ahead! He said, “Well, I’ve done fine every month without this guy’s help, so…” Ack! I finally convinced him to give just a couple of hundred dollars away.
Like the OP’s daughter, I know he feels some guilt, coming from so much privilege in the midst of a lot of suffering. I’m trying to help him think long-term - if he runs out of money, he won’t be able to stay and help.
This privilege guilt could be a double-edged sword. She has chosen a well-paid career, which she loves and is very good at. And I think she wants to donate in part to compensate for not doing a less-lucrative, but more “meaningful” job. I want her to contribute, but I don’t want her to live a guilt-ridden life - it’s not a crime to be successful. That’s why, surprisingly, I find giving a good advice much more difficult than expected.
@MaineLonghorn “I’m trying to help him think long-term - if he runs out of money, he won’t be able to stay and help”.
Exactly! I don’t care if she cannot afford any luxuries, but I would be concerned if she needs unsecured loans later in life. As part of this discussion, she is trying to figure out how much debt she can afford in the future to donate more today. Hmm…
Make sure your daughter realizes that the giving of her time on the board and through her charity work is a huge contribution as well! The worth of her time and talents is significant.
^Excellent point, @doschicos. I will tell my son that, too!! I don’t think kids value their time enough. As we get older, we realize how precious it is.
My opinion…have her max out any retirement contributions she can make. She should also have an emergency fund in case she loses her job. Then she should feel free to use her discretionary income any way she chooses.
We encourage charitable contributions…even smaller ones.
Yes, by taking care of her own position first (and you said her spending is modest,) she enables a part of that extra money and time to go to causes she believes in. Then, if something happens to her income, unplanned or planned, she could be able to continue giving. Maybe she’d see that. It’s a variant of the “your own oxygen mask, first” advice.
