Every holiday season challenges us to make smart budgeting decisions, as well as to exercise strategies for balancing everything from holiday work parties to family commitments. In addition to making our holiday shopping lists (and checking ‘em twice), it’s also the time of year to give generously to nonprofits close to our hearts. Yes, we do this because we care. But it’s also important to understand what you get can get back from giving. There are money-saving and soul-enriching perks of giving back to those in need — and you might as well be maximizing them, too. They may even enable and inspire you to give more.
Think before you click (or write that check)
During the holidays, charitable giving opportunities are everywhere. And truly, we mean everywhere: When we check out at the grocery store, when a friend forwards us an email touting her favorite cause, when our children bring home fundraising packets from school, and when we attend religious services. But before we say ‘yes’ to giving that extra dollar, Brown says it’s essential that we look into the charities we contribute to. Investigating where our money is going teaches us to be savvier spenders overall — especially when we’re intent that our dollars will make the greatest impact for those less fortunate. Brown suggests checking out any non-profits that catch your eye on the website Charity Watch, which reports how effectively the organizations use your money. For example, how much of your money is really going into charitable programming, compared to administration fees and executive salaries? Generally speaking, charities that dedicate at least 75% of their operating budget to their on-the-ground efforts are considered highly efficient, and having these numbers on hand should give us peace of mind when donating.
Consider letting loved ones know you care — sans wrapping paper.
When we’ve been with our partners for years — or, ahem, a decade — it feels like we’ve covered almost every type of gift conceivable. Or, when we have friends who promptly go out and purchase everything they want for themselves, it’s tough to brainstorm the perfect gift. But who says you have to give material goods? Sharon Epperson, senior personal finance correspondent for CNBC, suggests donating to a cause our loved ones support. Not only is the gesture thoughtful, but it can serve to spark passionate conversations with people we love most. These discussions can make us feel closer, more connected and even inspired by our friends, partners and family members. After all, if the holidays are about gathering our nearest and dearest, it doesn’t matter what’s under the tree — or near the menorah — it’s about the quality time we spend together.
Keep yourself accountable by auto-giving.
While some of us are superstars at tracking every last nickel and dime, others seem to lose track of incoming and outgoing funds. For those of us who want to have a firmer grasp on the amount we’re giving back, ensuring that we’re hitting the marks we’ve set for ourselves, automating charitable contributions like you do other bills you pay (or contributions to retirement plans) can be an effective strategy. When we set up monthly, bi-annual or annual deductions, we have a consistent number to factor into our statements, and it may force us to check in on our accounts more often. “This is a huge benefit not only to the charity, but also to your own sense of peace around your personal finances. Use your passion for a charity to inspire at least moderate tracking of your spending,” says Certified Financial Planner Jennifer Luzzatto, president of Summit Financial Partners.
Rally the troops to make an even bigger impact.
Though many are motivated to give without expecting anything in return, we do receive a happiness boost when we help others. Luzzatto says charitable donations can be beneficial for our self-confidence and our sense of self. And our endorphins can be even more heightened when we combine our efforts with family and friends to make a larger impact — like volunteering at a soup kitchen. “This is especially good for children because their parents are not only modeling giving, they’re also inspiring them to think about the life situations of others,” Luzzatto says.
Strategize to save on taxes (if you itemize)
Finally, there’s no getting around the fact that the new tax bill — with the higher standard deduction — drastically reduced the number of people who itemize on their taxes. But if you’re one of them, or if you’re employing a bunching strategy where you itemize every other or every few years, charitable contributions are still on the list of those things that can help you trim your tax bill.
Keep in mind there are certain limits to how much we can donate and claim, but unless you’re donating hundreds of thousands of dollars, or donating more than you’re earning, you’re probably in the clear. No matter how much or how little we give though, financial advisor Jim Brown reminds taxpayers to maintain records of all our donations, which means retaining all receipts. Though a copy of bank records or credit card statements can suffice, just make it easier on yourself by having a trusted filing system in place where you keep everything.
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