You should treat charitable giving like any other expense in your budget, making sure to allocate enough to give what you can while still taking care of your other financial obligations. By having a dedicated line for this expenditure, you can ensure that you are giving what you desire and, more importantly, what you can afford.
When budgeting for charitable giving, there is no one-size-fits-all approach. Various options are available to suit your needs, and the amount that can be donated may vary. Knowing the different ways of giving can make budgeting for charitable donations simpler.
Choose a Meaningful Cause
Before deciding how much to budget for charitable giving, you should select a cause that you are truly passionate about. Contributing to a cause that resonates with your values and objectives will help you stay committed. Moreover, the satisfaction you get from doing so is invaluable.
Decide How Much to Give
Before deciding where to donate, it’s important to ensure your finances are in order. It’s often recommended to have at least three months of expenses in a savings account and no high interest debt in your name, such as credit cards. Once your finances are in a good position, you can think about how much you would like to give. Evaluate your monthly expenses and the money you have saved to decide how much to give. It doesn’t have to be much; any contribution will be appreciated by the organization. Remember this when you figure out what amount fits your budget.
Decide When to Give
Rather than waiting for the holidays to make one large donation, consider donating smaller amounts throughout the year. Organizations appreciate donations year-round, not just around the holidays. If you are confident you can afford the same amount every month, it would be a great idea to set up a recurring donation with a nonprofit organization, much like you would with an online bill. However, if your expenses vary and you’re worried about having enough money, it’s best to make smaller donations throughout the year when you can.
Use a Dedicated Savings Account
If you would like to donate money, it is recommended that you set up a separate savings account specifically for this purpose. Once your other financial obligations have been taken care of, you can add money to this account. By labeling the account “Charitable Giving,” you can easily track how much money is available for donations. Additionally, you can set up automatic deductions from this account each month or whenever possible.
Donate Appreciated Assets
When thinking about donating to charity, you might consider giving appreciated stock that you have held for over a year. This way, the charity will receive the full, current value of the stock, and you can avoid paying capital gains tax and deduct the fair market value.
If you unexpectedly receive money, thank about donating a portion to a cause that is important to you without having to take away from money necessary for expenses.
Take a Tax Deduction
There are two types of deductions available when budgeting for charitable giving: itemized or standard. Previously, those who itemized could deduct charitable contributions, but now those who take the standard deduction can also do so. There is a limit of $300 for individuals and $600 for married couples; however, this only applies to monetary donations, not clothing or other items.
The Bottom Line
When making your plan for donating, keep in mind that it should be tailored to your specific situation. You must determine how much to give and where to get the funds; no matter what you choose, your contributions will be highly valued by the beneficiary. With careful planning, charitable giving doesn’t have to be a complicated process, and it’ll make a huge impact on your community.