Charitable giving is one of those things that just feels right. It’s a way to realign your money with your values, support causes you care about, and feel pretty good about it, too.
But like anything else in your financial life, it works best when it’s intentional. Here are some ways you can make an impact with charitable giving and build it into your budget so it happens consistently.
Why charitable giving matters
There are many benefits of charitable giving. It’s not just about helping others (though that’s a big part of it). It provides some meaningful personal benefits, too. Here are just a few:
It helps your community
At its core, giving is about impact. Whether you’re supporting a local food bank, an animal shelter, or a homeless outreach program, your dollars are going directly toward improving lives in your community.
And if local isn’t your thing? You can always donate to national or even international charities that help people worldwide.
It actually makes you happier
In addition to helping others, giving also helps you. Studies prove that giving increases your own happiness. A Harvard University study was conducted in which participants were given a small gift (a goody bag of treats). Some (not all) were given the option to keep the gift or donate it to a sick child.
Those who chose to give the goody bag to the sick child, vs those who weren’t given the choice, showed a small but noticeable boost in their mood.
It instills the value of generosity
If you value generosity, then donating to charity is a great way to express it. If you have kids, you are also teaching them this important value.
In fact, kids who grow up in families that regularly donate to charity are more generous and more likely to give to charity as adults. Those kids also give more of their time to charity, are more likely to be close to their family, and rate themselves as happier than those who did not grow up in homes that valued charitable giving.
There may be tax benefits
Depending on where you live, charitable donations can come with tax advantages. It’s worth checking the rules in your area (or chatting with a tax professional) to see how this applies to you.
So… how much should you give?
There’s no “right” number here. Every bit helps, so don’t feel like you aren’t doing enough. But here are some guidelines to help you decide how much to give.
Percentage of income
This is a very common way to decide what to give. It works on the idea that the more you earn, the more you can give. Ten percent of your income is a common guideline for charitable giving, but if you aren’t giving that much, that’s ok!
Decide on a percentage that feels comfortable to you and work that into your budget. If you want to give 10% but aren’t there yet, just slowly work your way up to that over time.
Fixed dollar amount
You can also choose a fixed dollar amount to give to charity. Many charities use a subscription model, automatically debiting a set amount each month. You can choose how much to send and then treat your giving like a bill that needs to be paid each month.
If the tax advantages are a factor for you, you may also want to target a specific tax credit. For example, the state I live in (Arizona) offers a tax credit up to a certain amount, so it makes sense to at least take it up to that limit, since it directly reduces my taxes dollar for dollar.
Exactly how much to choose is up to you, but don’t stretch yourself too thin. Choose an amount that is comfortable now, and you can increase it over time if you want to.
Give based on impact
Instead of starting with a number, you can always start with the impact you want to make, and budget accordingly. For example, if a local food bank can provide five meals for a $1 donation, a $200 donation could provide 1,000 meals!
Find a charity that speaks to your heart and learn what kind of impact your dollars can make, and donate accordingly.
How to donate
Step 1: Choose a cause
First, you’ll want to decide what issues speak to you. For example:
- Food banks
- Homeless shelters
- Research for specific health issues
- Helping sick children
- International causes
- Pet shelters
- Climate change research
- Veterans
… and many more.
The causes you can donate to are endless, so start with one or two that mean something to you.
Step 2: Choose a charity
Once you know the cause you want to help with, choose a charity that works towards that cause. This can be a complicated process. You’ll want to choose a charity that uses its funds wisely and is truly making the impact you want.
Websites like Charity Navigator or Charity Watch can help you find reputable charities.
Step 3: Give
Once you’ve chosen your charity, you’ll want to start donating. As you can imagine, charities make this very easy. If you go to your chosen charity’s website, you’ll likely find a way to donate.
You’ll likely be able to make a one-time donation or set up a recurring donation. You may even be able to set up payroll deductions if the charity is partnered with your employer.
How to budget for charitable giving
Adding charitable giving to your budget is one of the best ways to make it happen. The easiest way to do this is to create a budget category for giving, something you can easily do in Lunch Money.
If you are setting up automatic donations, treat your donation as you would any other recurring expense. If you are donating lump sums on occasion, consider setting up a “sinking fund” where you budget a set amount each month but allow those dollars to roll over from month to month. The money will build up in that category over time, and you can donate lump sums as you see fit.
If you are donating to just one charity, a single budget category usually does the trick. But if you support multiple causes, it’s cleaner to create a category group for charitable giving. You can do this with Lunch Money!
Think of the group as your top-level “Charitable Giving” bucket, with each individual charity set up as its own category underneath. That way, you can track each donation separately while still seeing your total giving at a glance.
Want to make giving a consistent part of your budget? Try Lunch Money free for 30 days and set up a simple system that keeps your generosity on track.
Final Thoughts
Whether you give a percentage of your income, a fixed monthly amount, or donate based on the impact you want to create, every contribution matters. You can build giving into your budget to ensure it’s part of your financial plan, not an afterthought. Remember, your donations can strengthen your community, reflect your values, and make you happier!
