Today’s Thanksgiving holiday got me thinking about the role of giving in the journey toward Financial Independence and Retiring Early (FIRE). When I searched the mountain of writing by FIRE bloggers, I found surprisingly little describing how people conceptualize and practice giving. I’m not sure why bloggers who are comfortable sharing all their financial data online don’t discuss if, where, or how they give. But the lack of information inspired me to describe our approach. I hope a little transparency will open up more conversation on this topic.
When we first started working towards FIRE, we were part of a Your Money or Your Life accountability group that met monthly to share and analyze household financial data. We were the only people in the group that had a monthly budget line for “tithing” (which was the term we used at the time). Throughout the year, our group members pounded us relentlessly with questions about our tithing because they felt it was completely irrational when we were working towards FIRE: “Why are you giving so much?” “Why are you giving money away when you have outstanding debt?” “Why don’t you give time instead of money?” “You help people for a living, isn’t that enough?” etc…
I understood the questions, but my husband and I had developed a habit of giving 10% of our net income. It brought us tremendous joy and we had been doing it since the beginning of our marriage. So despite the fact that everyone in our FIRE community argued that giving money away made it harder to save, we gave anyway (even if we were unable to fully articulate why). Over the course of our 23-years of marriage:
- We gave 10% when we were struggling students
- We gave 10% when we were aggressively working to pay off debt
- We gave 10% when our incomes increased, and
- We gave 10% when we became entrepreneurs
While giving was a well-established habit in our household, once we retired, we paused to re-think what giving should look like post-FIRE. Specifically, we asked ourselves: 1) should we change our 10% habit?, 2) should we shift from giving money to giving time, energy, and expertise (as is common when people retire)? and 3) should we set up a DAF for tax purposes?
The result of answering those questions was that we chose to continue giving in retirement and expand what we give in terms of our time. But the reflection process allowed us to articulate the three reasons why we give:
1) Financial Gifts Helped Us
We both received financial support that helped us succeed in our professional lives and we share a strong desire to pay it forward. For example, in graduate school I received a fellowship that paid my (private university) tuition and provided a monthly stipend for 5 years. That fellowship was an incredibly generous gift that came from a donation made by one family.
To be clear, I didn’t spend time with that family — their gift was purely financial. But that financial gift enabled me to avoid accumulating additional student loan debt while I earned my graduate degrees and it shortened the climb out of debt upon my graduation. This financial gift not only made a huge difference in my life, but the generous spirit of the donation inspired me and instilled in me a sense of responsibility to provide financial gifts to others.
2) It Feels Good to Give
There are many psychological benefits to giving including increased life satisfaction, sense of meaning, and happiness. But I don’t need empirical research findings to know that it feels good to give! When I give money, I experience a surge of joy because I know that our financial gift empowers organizations that are already doing great work with additional resources to expand their impact.
It’s not a “look at me! I’m-so-awesome-because-I give!” kind of pleasure. It’s the joy that comes from shifting my focus towards making positive change, investing in solutions to persistent structural problems, and supporting people who have devoted their lives to helping others (and just need resources to expand their work). I don’t know how to solve most problems, but using the resources we have to support people who do feels awesome.
3) FIRE Provides The Freedom to Serve
I don’t know about you, but I didn’t retire early so that I could sit around all day, eat snacks, and binge-watch TV. I FIRE’d to be of greater service to others without the time-intensive constraint of paid employment.
Vicki Robin (co-author of Your Money or Your Life) suggests that the freedom you gain from FIRE should serve others as opposed to being entirely self-focused. I agree with her sentiment that:
“The idea of financial independence is great, but if you don’t use your freedom in service to something higher than just yourself, then what are we doing other than taking a lot of smart people out of the common project called our society?”
To me, freedom means having the power to choose where we give, what we give, and how we give. In other words, freedom from a job means that I now have time to contribute to making the world a better place. Through trial and error, I’ve realized that the best contribution of my time is mentoring emerging leaders and serving on boards.
So in my retirement, I reserve 5 hours per week for mentoring calls and 20 hours per quarter for board work. This isn’t something I had time for before I retired so it feels amazing to be able to serve others in these two ways.
In terms of financial contributions, we give to community-based organizations that: 1) are aligned with our giving priorities (racial equity, gender equity, and entrepreneurship) and 2) where our contributions can make a significant impact. For us that means giving annually to:
- 1 grant-making fund (The Groundswell Fund)
- 1 experimental program at our alma mater (Women in Entrepreneurship), and
- 1 international charity (The Just Like My Child Foundation)
We keep it simple, we make multi-year commitments, and we make the contributions out of our DAF. These decisions keep the accounting simple, allow us to make significant contributions to each, and provide tracking data so we’re clear about the impact of our giving over a multi-year time frame.
Now you know how we think about giving and put it into practice. (both pre-FIRE and post-FIRE). While it feels a bit vulnerable to reveal the details, I’m doing so because I want to encourage others to share their thinking about the relationship between giving and saving. I’m sure there are many ways people think about and practice giving in the FIRE community! So…. let it rip:
- What role does giving play in your FIRE plan?
- Does it vary pre-FIRE versus post-FIRE?
- How do you choose organizations, priorities, and length of commitment?
- Do you think differently about giving time versus money?
I look forward to hearing from and learning from you!
p.s. – If you want to read some FIRE bloggers thoughts on giving, here are a few resources:
- Money Can Buy Happiness – Thoughts On Direct Charity
- We Spent 17% of Our Income
- The Best Way to Donate A Hundred Grand
- So… I Fostered
- Notes on Giving Away My First $100,000
- Tithing: Are the 4% and 10% rules compatible?