Billions of people around the world identify themselves with a particular faith or religion. Most give financially to support their religion. Some faiths prescribe a specific level of giving, others ask only for modest donations and still others ask for all you can give.
Here are some thoughts to help guide your thinking about giving to your religion:
I belong to the Church of Jesus Christ of Latter-day Saints, which is among the religions that prescribe a fairly specific level of giving, beginning with (but not limited to) a 10 percent tithe. I consider my donations to my church as both a privilege and an obligation. Many other Christian churches also call upon their followers to pay a formal tithe of 10 percent. More importantly, many followers of such churches do make donations of 10 percent or more to their churches.
If you don’t belong to a church that prescribes that or any other specific level of giving, the ten percent threshold provides a relevant reference point. Constructing and operating a house of worship, together with funding the charitable operations that often go along with organized religion, require money. If you are a faithful, active member of a congregation your pastor, priest or rabbi may provide you with guidance. If you don’t get such direction, the reference point of a tithe may be helpful. Leaving $5 per week in the collection plate may not represent your fair share.
You may worry that you can’t afford to give 5 or 10 percent to your religion. That is a valid concern. To do so, you may need to restructure your financial situation a little bit — perhaps over time.
Here are some specific things you can do to make room in your budget for giving more to your religion:
•Spend less on your cars. To do this, simply choose to drive your cars for a longer period of time; add two years to what you’ve done before and you’ll likely save the equivalent of $100 per month.
•Review your discretionary spending. If you aren’t keeping track of your discretionary spending on things like clothes, entertainment and eating out, by taking the time to figure out how much you’re actually spending you may quickly find several hundred dollars per month. Tip: Use the free service at a site like Mint.com to track your spending.
•Stay in your home. Every time you sell your home and move, it costs about 10 percent of your home’s value in transaction costs. The longer you stay in your home, the more equity you will accumulate; while that value is hard to spend, it may help to offset a small reduction in savings due to gifts to your faith.
For those who belong to a religion that asks you to give all you can, let’s consider some healthy constraints that will ensure that you remain self-reliant even as you give all you can:
•We’ve already established that many people can give 10 percent of their income consistently without giving up their financial dreams; if you are considering any level of giving up to that point, you are likely safe.
•To be self-sustaining in retirement, you’ll want to have about 15 times your pre-retirement income accumulated in savings and investments. If you are on track for that goal, you can give more generously. If you are behind the curve, be cautious about giving more than 10 percent.
•If your total monthly debts exceed 40 percent of your income, you should be focusing your resources on getting out of debt and certainly should not be contributing significantly more than 10 percent of your income to your faith.
•For those who have substantial assets — in excess of 20 times their earned income in investments — you can afford to be generous. Your investment income likely exceeds your earned income and you can already afford to retire if you choose. Be as generous with your income as your heart allows.
Knowing how much to give to support your faith or religion can be tricky. The reference points above may help you determine how much you can give and develop a plan to help you give more—without giving up a secure retirement and happy family.