With the New York Times article on Fat FIRE, I've been thinking a lot more about the repercussions of achieving financial independence and retiring early. One of those repercussions is that financial independence can turn you into stingy person who is unwilling to give!
Every year, my kids' Mandarin immersion independent school hosts a fundraiser for various needs. This year, the fundraiser was focused on paying for an expensive remodel of a new campus on the west side of San Francisco.
I didn't attend mainly because I had a cough. However, my wife went thanks to an available ticket from a fellow parent. I had gone last year to much fascination. This year, I was happy to stay at home, watch the kids, and cough my lungs out in peace.
Plenty of parents gave between $500 and $2,000. Some even gave between $10,000 to $100,000. I was truly impressed and inspired with how magnanimous they were. Then I began thinking about how much more difficult it is to give if you are financially independent but don't have a day job.
The Challenge To Give More When FIRE And Not Be Stingy
I wrote this post partially as a personal challenge to give more. Given that at age 46, I'm halfway through life's journey, it's imperative I spend and give more generously to prevent leaving too much behind. It's better to help people while alive than once dead.
Simultaneously, I've just emerged from an 8-month liquidity crunch after purchasing a new home – an experience I never wish to repeat! I'm only starting to feel less financial stress. Consequently, I'm struggling to give as charitably as I normally do, resulting in guilt.
For me, being able to attend both high school and work in America has been an immense blessing. As a result, it's only right to give back as much as possible by paying taxes, donating money and time, and helping others achieve financial freedom through my online writing.
However, I also want to share how your giving mentality may deteriorate during and after achieving FIRE. When aggressively pursuing FIRE, as I did from 1999 – 2012, charitable giving takes a backseat. Saving and investing as much as possible becomes the priority to break free from work.
Once you reach FIRE, just as it's difficult to spend more after years of aggressive saving, it can be challenging to give more since donating is also a form of spending. From the public budgets and income tax returns I've observed online over the past decade from FIRE individuals, I've noticed they have little-to-no charitable giving.
Let's explore further why achieving financial independence could make you stingy and cheap.
How Much Can Someone Who Is Lean FIRE Give To Charity?
Let's say your investments generate $35,000 a year in gross income, and you live off of $30,000 a year. For all intents and purposes, you are considered Lean FIRE.
You don't have much wiggle room to travel extensively, own a median-priced house in your city, go out for steak dinners, or drive an average new car that now costs $49,000. And that's fine because you don't value such things. You choose to live a minimalist life.
But what about giving to others less fortunate or contributing to causes that improve your community? Given that you're already living quite minimally on $30,000 a year, it's hard to give much more than maybe $3,000 a year, or 10%. But amongst the Lean FIRE budgets I've seen online, the amounts that go to giving are zero or little.
Forget about donating to charity. They aren't even willing to increase their safe withdrawal rate because that would eat into their principal, forcing them to live on even less passive income. With already such a relatively low annual income amount and thin margin for survival, making room for charitable giving is just not a priority.
It makes sense. The absolute dollar amount you can give is often limited by how much you actually earn. If you don't have a steady job and don't have much retirement income, it is only naturally that you will likely give less.
Receiving Government Subsidies In Retirement May Make You Stingy
One of the most common questions in the comments section of the New York Times Fat FIRE post was how those of us who are FIRE pay for health care insurance. As a household which earns more than 400% of the Federal Poverty Level (FPL), we pay $2,500 a month in health care premiums for a silver plan because we receive zero subsidies.
Yes, paying $2,500 a month in health care premiums is painful, but that's the way the system is. Healthier people not living in or close to poverty are asked to subsidize less healthy people who live in or close to poverty. This is the way it should be, followed by a healthy dose of preventative maintenance education.
I would feel bad accepting federal subsidies for health care insurance given my net worth and passive income amount. However, if you are Lean FIRE or regular FIRE, you can get health care subsidies from the government, and almost all do so without a problem.
You can even virtue signal about how more people should pay more taxes and higher premiums, while not doing either yourself!
2024 Federal Poverty Level Chart
You can earn up to 400% of the Federal Poverty Level (FPL) per household/family size and still qualify for healthcare subsidies. For example, a family of four could earn up to $100,000 a year in total income based on a $2.5 million investment portfolio and still receive healthcare subsidies. Many would say this family is rich, especially if they live in a multi-million dollar house too.
If you're retired and your $1 million portfolio only generates $30,000 a year in income, then you will likely not pay anything for health insurance for your family of four. The lower your income, the more significant healthcare subsidies you receive.
Once you start receiving healthcare subsidies from the Federal government, especially as an early retiree millionaire, you may be less inclined to donate money. If you do donate, you might start thinking that you're wasting the healthcare subsidy benefits you're receiving.
You become so accustomed to scraping, saving, and maximizing every government benefit available that giving becomes an afterthought.
If you don't get health care subsidies as an early retiree, then you can easily justify not giving as well. After all, you are paying a huge premium to subsidize others, which is a form of giving.
The Expectation Of Paying Less Taxes In Retirement
Receiving healthcare subsidies as a millionaire is likely an unintended consequence of the government's healthcare system. What's also interesting is that once you primarily earn investment income, as opposed to W-2 income, your tax liability decreases significantly.
Below are the 2024 long-term capital gains tax rates by income level. If you are single, you can earn up to $47,025 and pay zero federal long-term capital gains tax. If you are married and filing jointly, you can earn up to $94,050 and pay zero federal long-term capital gains tax. Quite favorable!
However, what may happen is that if you become accustomed to not paying income and capital gains taxes and also start receiving healthcare insurance subsidies, you might develop a mindset that you are always entitled to such benefits.
When we start expecting to pay nothing, it may become harder to give back to others or charitable causes.
What About Giving More Precisely Due To Having More Cash Flow?
One could argue that once you don't pay taxes and get subsidies from the government, it frees up more disposable income to give. But that doesn't often happen due to human nature. Most of us have the desire to hold onto our wealth, no matter how much we have. The government understands this, which is why it has implemented a progressive tax system.
According to the chart by the Tax Foundation, the share of income taxes as a percentage from the top one percent has increased. The top one percent pay more than their fair share of income taxes because their share of total taxes paid is far greater than their share of income.
And if you are FIRE, you are unlikely earning a top one percent income of ~$650,000+ from your investment portfolio. On the contrary, you are likely earning an income in retirement that falls in the bottom 50% range in retirement, which is why you qualify for healthcare subsidies and lower tax liabilities.
Nobody Volunteers To Pay More Taxes Either
Now consider the 40%+ of working Americans who pay no income taxes, according to the Tax Policy Center. This percentage has been high for an extended period and even surged to about 60% during the pandemic.
No rational person who isn't paying income taxes is going to be willing to voluntarily contribute, say, even just $100 to the Federal government to help pay income taxes for our country. Perhaps those who don't pay income taxes are donating some of their money to charity instead, but it's difficult to determine.
Taxes can be considered a form of charity since the money gets redistributed to help those who have less. Yet, even if people who don't pay income taxes know this, there isn't any desire to pay more, if any taxes by most people.
Human nature tends to make us want to hold onto our wealth and maximize personal benefits. If you don't have the security of a job and are facing unknown variables in the future that may cost a lot, you tend not to give as much.
Having A Day Job Will Give You More Confidence To Give
When you are FIRE, you rely primarily on your investments for income to sustain your lifestyle. Given that you can't control how your investments perform, you are at their mercy to a certain extent. Sure, you can make asset allocation and investment decisions, but once those decisions are implemented, you relinquish control.
When you do not generate active income to buffer any investment declines, it becomes much harder to give charitably. We see this phenomenon play out with charitable giving declining during bear markets.
However, if you do have a day job, you can count on a reliable paycheck. You might even receive a year-end bonus and stock options. In such a scenario, giving is much easier because you have more financial security, even though you might not be technically financially independent. An employed person perhaps has the illusion of financial security, which can facilitate more generous giving.
If you want to be less stingy and give more, it may be better to hold onto your job for a more extended period. Achieving FIRE can make you much more sensitive to your cash flow needs and changes in the economic environment, potentially hampering charitable inclinations.
Just look at the men who claim to be financially independent, yet are unwilling to let their working wives join them in retirement. Some will even get on podcasts and not even recognize their wive's income contributions. With so much fear about being financially independent, these folks won't be giving much at all to charity.
Be Dynamic In The Amount You Give
Just as it's wise to be flexible with your retirement withdrawal rate as circumstances change, it's also good to be flexible with your rate of giving. Sure, targeting a set percentage of your income to give is a quick and easy way to consistently give as your income changes. But feel free to adjust the percentage as well.
We all know that giving, whether it's money, time, or knowledge, is one of the greatest feelings. I'm sure we all want to give more. However, expenses come up all the time, and there's always the fear of the unknown. Our responsibility is to take care of ourselves and our families first before we can effectively help others.
If we can't give money temporarily, that's fine. We can volunteer our time or share our knowledge until we replenish our funds and feel more financially secure. We can also organize or participate in fundraisers.
The reward for helping others has personally been a huge motivator for why I've continued to write on Financial Samurai since 2009. Some readers have been reading since college and are now in their mid-30s with kids. Others have gone through financial disasters and are now financially independent. So awesome!
I can't wait to reach a point where money is abundant once more. As I climb out of a tight cash flow situation, I'm slowly starting to give more again. At the end of the day, the more we can save, the more we can give away.
So there you have it. Pursuing financial independence and achieving financial independence can potentially make you stingy and less charitable. Be cautious of this tendency. The FIRE movement is already facing criticism about its participants not contributing enough to society. A lack of charitable giving might just be another black mark against it!
Related: Donor-Advised Fund: A Tax-Efficient Way To Give Stock
Reader Questions
There are plenty of criticisms about the FIRE movement. Is being a stingy person who doesn't give much to charity one of them? How have you been able to balance giving to charity and saving for your financial future? Have you noticed a lack of giving, paying taxes, and receiving healthcare subsidies by those who've achieved FIRE as well? For those curious, we ended up giving $5,000 to the school fundraiser.
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Lowest income quartile (under $20,000): This group tends to give a higher percentage of their income to charity compared to other quartiles. On average, they donate around 4.5% of their income.
Second income quartile ($20,000 – $49,999): People in this quartile donate approximately 2.5% of their income to charity.
Third income quartile ($50,000 – $99,999): This group gives about 2.0% of their income to charitable causes.
Highest income quartile ($100,000 and above): Individuals in this quartile donate around 3.0% of their income to charity
There’s nothing like facing existential demise that helps encouage giving. I’ve donated so much since October 7th that I’ve been in danger of over-donating a couple of times. I’m now careful not to donate more than 25% of my USG annuity every month. Once I hit that, I stop donating for the rest of the month.
Hi Sam, Good article. Perhaps an example from 20 years ago. We are having dinner with assistant pastor and he offers opinion on giving with a question. Doctor In the last 20 years estimate the amount of free care, in residency, unpaid bills by patients, insurance companies & governments. My wife the OBGYN says millions of dollars pastor. Pastor says both of you work and pay a high percentage of all taxes collected by governments. Also both of you come from humble backgrounds improving by massive intense years of studied and now work massive hours. Pastor says in my opinion stop all giving. Why because the laws of society mandate your giving.
Now we know that many “traditional charities” are funded by tax payer dollars. The “religion” based hospitals are government funded. Catholic charities are giving billions of dollars to break USA immigration laws. I do not approve of tax payer dollars for foreign aid and weapons.
During my Wife’s four year residency, I worked many OT hours and all the residency pay went to pay the medical school loans from Chase Manhattan at 18%. The first year of private practice we completed paying all student loans the DC 5% loan was last because no payment required until residency complete. Guess what the next tax year student loan interest could be deducted for the first time on IRS return. All this money stuff is a moving political circus. So all this charity shaming by society falls into the none of your business private camp. Also the 501C grift has exploded in this century. I laughed at the itemized deduction chart knowing 11% of tax payers itemize.
Thank you for the interesting article and take on current society. Charity begins at home.
We are retired since 2015 and minimize taxes with LTCG. Currently enjoying 3 months in Waikoloa beach scuba on !
Fun fact I worked for Electric company which gives away one million per week to charities. VP friend told me $50,000,000/4000 employees = $12,500 per employee not in your pay check or bonus. Now multiply that idea by all the bills and taxes you pay. Net result your forced giving is huge,
This is all very interesting.
I have two quick questions, maybe you can address in another newsletter.
I’ve always wondered how the federal poverty level is defined, and is it ever adjusted for inflation? It just seems like a terribly small amount of money for a family of four to realistically survive on.
second question: Is there any way to survey the FIRE people and ask how HAPPY they are in comparison to the general population? Having a job gives a person purpose. Having a purpose is good for mental health. Maybe FIRE is too young a phenomenon for any real data on happiness levels?
As always, thanks for your insights.
As someone who retired in our late 30’s, I can tell you that I am WAY happier then when I was working. You can have purpose without a job. Your job (hopefully) doesn’t define you and in my opinion, it is sad if someone’s job is the only thing that brings them happiness. I can say, I am more present for my kids, my marriage is better, and I am healthier than I have ever been. I also have plenty of time to travel and explore my ever-growing list of hobbies. Those things all contribute to being happier.
And yes, the FPL is adjusted every year, it doesn’t go up by much, but it does get adjusted.
We only give charitably to the church we are members of, OpOverwatch which deals predominantly with the families of LEO’s & Veterans.
On retirement: A neighbor retired from (a tax free retirement) NYS job (65) & sold his home @ the height of the RE Mkt (paid $75k 30+yrs ago, sold for $420k) He took Soc Security early & bought a patio home, which he only has a small ($125k) mortgage on ???
An avid health guy he goes to the Gym, 6days a week, but says he has no other interests at all? He then tells us we should take it easy as he occasionally sees us leaving at 6am with my truck/trailer loaded for the properties we own/rehab/rent/sell etc etc. We told him we enjoy it, plus we hit the gym @ 7-8am 4 days a week, even when wintering in AZ. His reply, “you guys spend way too much time together”??
As an aside we have not had a mortgage on any of our properties since 1998, including the 3 homes we live between. Nor any debt on any of our new ‘business’ vehicles we Sect 179, every 5-7 years. We continue to buy, rehab, sell & rent & we’re told it’s an addiction.
Hi Sam,
About giving… I start the year with an x amount in my ‘penalty jar’. Traffic tickets are paid out of that box. What is left goes to charity (on top of my standard gift).
I hate subscriptions and registrations. They tend to keep calling you, so i simply wire money to their bank accounts so they have no contact details.
Apart from that i select investments that help
Society. Battery conpanies or bio fuels, fortest for bio plastics… Instead of standard real estate, i invest in realestate for supported living. Etc…
There is so much good you can do AND invest… Perhaps you make 6% iso 8% but so what…
Thanks for you news letters!
Regards,
Bjorn
You’re right about the giving. When I really identified what my financial goal posts were on my continuum, I cut back my giving tremendously. It wasn’t a lot to begin with, but when you look at it as a percentage of income, it was significant to me. However, now seven years later, being in a much better financial situation, having saved and invested to the max of my ability, I now have the ability to target my giving in an impactful way: I started a small scholarship that benefits marginalized youth. This feels very meaningful and a much better spend than $25-50 to a ransom organization here or there. So in this way, has the FIRE mindset actually contributed to more generosity???
Food for thought. :)
Thanks for the engaging philosophical articles!
There is definitely an element of luck even for those who have worked hard to achieve financial success. In my faith there is a principle “To those much is given, much is required.” I like your idea of worldview, or in my case my faith. We can argue all we want about how much is earned and how much was luck, but at the most basic level every single one of us who was born in a first-world country is “blessed”, even those we call poor because of the assistance available. And that is just a fact.
The question now is whats next? Personally, I don’t care much whether folks give money or time but both are preferable. If you pay taxes you are giving to safety net programs for the poor/disabled/etc…those with less luck.
I became a court-appointed special advocate in our county to provide assistance to kids dropped into the court system. Its a volunteer position. 15-20 hours a month. There are so many ways to give back!! and so much need!! To walk around life with millions in the bank and just tend only to your needs and wants has a word…narcissism (and/or hedonism). You can do both – go on great cruises, have a fancy car, play alot of golf..and give back.
“Taxes can be considered a form of charity since the money gets redistributed to help those who have less.” You mean companies like Raytheon, yep they’re really hurting.
What’s the story with Raytheon?
Lean fire is cash poor, time rich. Simply donate time, for example teaching a financial education class at a high school, etc
Have you personally witnessed Lean FIRE people volunteering much?
No, though sample size is small. Maybe do a poll, 1/5/10hrs of volunteer time per week/month.
Sure. I’m pretty sure the vast majority (90-%+) volunteer 0 hours a week.
Any data to backup the claim?
Yeah, but then I’d out all the people and I don’t want to do that. It’s not the point. The point is to encourage me and others reading this post to considering giving back more and more often if we are so fortunate enough to benefit from financial education and this bull market.
2024, for example, is another gift for all types of investors. Giving away some of the gains through a DAF would be a good idea.
How about you? What have you noticed and what’s your situation?
Sorry but, how is my situation related with my question? I understand that you are trying to encourage people to give back but your statement “I’m pretty sure the vast majority (90-%+) volunteer 0 hours a week” is very dismissive and baseless, don’t get me wrong, you have a great blog and good points, but you don’t need to attack a movement to prove your points, enjoy your financial situation and encourage others to give more, no need to make assertions without bases.
For sure. The goal is to encourage myself and others who’ve been lucky to be more giving with time, money, and mentorship.
If you feel bad sharing your story or what you are doing to give back, no worries. I just like understanding the backgrounds of people who comment since I share so much about myself. Giving is a personal decision. To the extent you can share some background, then great. Feels good to be proud of yourself and your work.
Feel free to search the web yourself about the budgets and giving by FIRE people. It’s not about shaming people, hence the privacy. This lack of giving is only my observation about the FIRE movement, which I helped kickstart in 2009.
Ariel, your defensive comment on a neutral question and unwillingness to share something about yourself signifies you don’t give much of your time and money to help others.
The more you give, the more you will receive. And even if you don’t receive anything, you’ll feel great knowing you’ve helped others. Volunteering your time to directly help others is the best. Give it a try! It’s never to late to start giving.
I recommend that you watch some of the stories on generousgiving.org. Especially the one on Tom and Bree Hsieh. Amazing organization, amazing people. Let me know what you think.
There is a lot of content about being stingy and the good “deed” on giving money to charities. To this end I would offer the followings.
– Stingy : With the exception of my parents who supported my education, no one else helped either my wife or me in getting to where we are today. We got here on our OWN hard work, dedication and sacrifice, and just because we are not spending six/seven figures ROI on annual basis, that doesn’t make us stingy.
– Charities : After an exhaustive research to identify worthy charities for providing financial aid, it has become clear that ALL OF THEM are nothing but a money making schemes. Just looking at their tax filings (that are public record) and what their so called CEOs’ remunerations are is truly mind blowing. When such so called charities have billions/millions $$ in assets, it begs the question about their true motives.
Based on your views, would you say you don’t give much or anything to charity? If so, what are some of the things you’re doing to help our community?
On your first point of stinginess, who are you believe all your success was based on your own doing, you may enjoy this contrarian post: Your outsized wealth is mostly due to lack: be grateful.
Thx
Interesting read on your published “outsized wealth” termed as being lucky!… but before I dive into it, we do support our local charities (but not establishments that use “heart rendering” narratives/images to deepen their pockets… St Jude… a typical example).
Now going back to your article, I am of the firm opinion that most the bullet points are not necessarily applicable to our situation, for the following simple facts;
– I had to get the right grades to enter one of the reputable universities in the UK. I also had to focus on my study to ensure I graduated with a good degree…. so no luck here!
– I also had over 70 employment rejection letters after college and even after I got my first opportunity, I had to prove myself every step of the way. So I would disagree with the notion of being lucky for getting a job… so one might call this as an opportunity, but certainly nothing to do with luck!
– We took foreign assignments and spent well over 15 years overseas (mostly in Africa)…. and whilst most of our expat staff used their bumped up earnings to live the high life (first class flights, fancy vacations, eating out every night, spending money like drunken sailors…) we saved up (and took our R&Rs every six months using the R&R allowances). … and by the time we had finished our foreign assignments we had accumulated significant cash reserve… again, nothing to do with luck.
Your article reminded me of our 401Ks/IRAs company assigned financial advisor that once told us that we were lucky with our 401Ks/IRAs growth that had an effective ROI of 10%… His comment was simply ignoring +10 years of past performance data and telling us to use his proposal (which turned out to be for his interest)… Needless to note that we left our assets “as is” and we have never regretted our decision… again, no luck here, but just doing our homework to ensure our financial independecy.
It really comes down to your worldview. If you see most of your success as luck, it tends to gradually over time shift your mindset toward gratitude. In addition to Sam, Warren Buffet has publicly attributed a lot of his success to good fortune multiple times. I am sure most people think he is “self made”, but he himself does not feel that way.
I too worked extremely hard to achieve my success, as have most people, but I don’t for a second believe that I was the sole reason for that. “No man is an island” as they say. If you still subscribe to the “pulled myself up by my bootstraps with no help from anyone else” mentality that is fine, but you may find greater peace and satisfaction if you realize that you were given some advantages that others in the world don’t have. Best of luck!
It is true that there can be some inefficiencies- like any organization. One thing is for sure though, if you give nothing then you can guarantee they get nothing.
The one who is on tight budget – on Lean FIRE, can do volunteer work, since he/she has time. I think it counts as Giving as Time is money!
Actually it counts much more. Compare it to giving money to close family/friends vice visiting. Time is much more precious than money as we all have a limited time on this planet.
Interesting article. As you stated, donating is a form of spending. And a lot of folks, including FIRE types, wrestle with either a scarcity mindset and or a frugality that makes it hard for them to spend money on themselves, let alone charity. It takes a few years minimum to get used to the lumpiness and unpredictability of retirement spending and budgets. If you’re early retired you worry more about making the budgets last.
I personally don’t think taking health care subsidies is so problematic given that the US system as completely dysfunctional and the cost isn’t in line with value. The subsidies bridge the gap of not having national health insurance and out of control healthcare costs. The plans have deteriorated so much that even silver plans are essentially catastrophic plans. Example: here in NY, NONE of the top cancer centers take plans bought on the exchange. When I was treated at Memorial Sloan Kettering over a decade ago, the whole treatment and surgery (at NYU) were covered by my Freelancers Union basic plan. Now, only Mt Sinai accepts exchange plans…meaning NO Memorial, Cornell, NYU, Columbia Presybterian etc. Given the lack of choices available, I had to sign up for the World Trade Center Health Program as a 9/11 survivor, which covers any costs not covered by insurance, but most importantly, includes Memorial, NYU, etc in the network.
Our plan is to give more of our time in the coming years, and when the first spouse hits RMDs, we’ll accelerate giving to charity, especially ones we feel strongly about.
I like your take on healthcare given how costly and messed up our system is.
There seems to be no solving our healthcare problem given Americans are some of the unhealthiest people in the world given how much excess we have.
Working for life to get subsidized healthcare is one of the great hacks for capitalism.
On point. I’ve seen FIRE bloggers brag about paying no taxes and getting healthcare subsidies, at the same time give nothing. Seems quite selfish.
Giving is a personal decision. But if you’re bragging about how free you are without giving anything back, you might be a sociopath.
The funny phenomenon on men who claim financial independence with working wives is amazing. Just heard a podcast where the man didn’t recognize his wife and her work at all.
Yeah, i’m not sure why they don’t recognize their wives jobs. I just say they are stay at home dads or stay at home husbands.
I’m going to explore this phenomenon with a guy who has a wife working in tech making $500,000 a year on my podcast.
Great insight, Sam. And cheers to the fellow college students who are now in their mid-30s with kids. You have influenced my life tremendously.
I’ll just add there are many organizations that require folks’ time, and not necessarily their money. A search and rescue team that has the best equipment in the country is useless without the volunteers giving their time. And the lonely elderly are in search of friendships and companionship.
So if folks struggle to give financially in FIRE, I’d be curious to see how generous they are with their time. Everyone gives back to this world in their own way, just as you have done with the blog.
To give or not to give is a obviously a personal decision but I strongly believe that there should be no tax advantages to doing so. If the government was not running huge budget deficits I might feel otherwise. Every charitable contribution which results in a tax deduction results in less less taxable income which has to be made up by other taxpayers. Essentially the government is helping to fund these charities. No wonder so many of the wealthy have their own foundations – it allows them to funnel tax dollars into their preferred causes.
I remember seeing Hillary’s tax return years ago (I only mention her as an example because I remember her return) and she gave one million to the Clinton Foundation which resulted in at least $350k of less paid taxes. At the time her daughter was an employee of the foundation.
Of course it would be very difficult to change the system as the donor class benefits directly.
The system is also skewed to only benefit specific charities. Prior to the pandemic I traveled to Russia each summer and volunteered in a local school practicing English with the students. Had I done this as part of a US charity I could even have written off my travel costs but I did it because I wanted to not because of a tax advantage.
Dear Sam: Thank you for this interesting article.
In your particular case, you have helped so many people through the Financial Samurai web site and podcast. You’ve donated many millions of dollars in free advice at this point!
I wish you every high school student in America would be required to read your book, and listen to your podcast. This type of knowledge is not necessarily passed down from parent to child, and so I think our society should do a better job of educating our young people about this essential info (such as saving and sacrificing early as you did).
Thank you for making my day, if not my year! Comments like yours really are motivating to help me keep on going, especially during some days where are more tired than others.
Thank you for reading and supporting my work. As a writer, all we really want is to be read.
Fight on!
The virtue signaling and holier than though attitude by some in the FIRE space is off putting. Bragging about not paying taxes and getting healthcare subsidies is also annoying. So I was just getting on a podcast and talking about how life is greater how much money one has. Thanks for bringing to life this point.
Great article, Sam! We donate about 10% of our net income to our church or charitable causes we care about. Since I’m still working, I can often get my company to match that donation. It really does make you feel good that you are making a difference, and I get the feeling that not a lot of folks do it.
I like the comment about making it automatic like a 401k contribution. I think human nature is selfish, when I see how much is in my donation account, I’m often tempted to use it to make a self serving purchase.
The increased standard deduction in recent years made charity less attractive in some ways. Unless you can itemize, you need to free up the liquidity for giving like any other cost, potentially creating taxable liability. It would be nice if charity could be deducted regardless of itemization to avoid that additional disincentive.
This applies if one is able to live on approximate funds while able to qualify for health subsidies, but if one is supporting multiple children, it is not sustainable. Also the Marketplace requires income reporting for all sources of income including passive from investment. A FIRE individual may not qualify for subsidies at all. It takes extreme frugality to qualify. These are passive income sources that are taxed at all levels earned over an entire person’s highest earning years that will continue to be taxed for life. The freedom achieved by financial independence deserves recognition for the tremendous discipline it took to get there. Let them choose how to spend and give. That is the whole point of it all … stinginess and all … and when the timing is right for them, if they choose, to give back to society.
As a percent of AGI, it seems that lower income gives more.
This is one of my favorite articles of yours, Sam. It is so easy for all of us to make excuses to not be more generous. I think it is great that you are putting yourself out there and writing this article to hold yourself accountable.
I wish more would do the same!
I’ve found I can be generous on a basic level in my day to day interactions, but the only way that I can give at the level I aspire to is if I automate it, similar to 401k contributions. By making it a monthly line item that is taken off the top, I don’t miss it. Even then, it’s often the first place I consider cutting if I’m in a cash crunch.
Luckily, I usually am able to convince myself to keep it going. Great work and I hope you can inspire others to be more charitable or to continue in their current path of generosity. It is very hard to do, but the rewards are non financial and are more than worth it.
Be well!
Smart observation on the lack of charitable giving donations on Lean FIRE budget and tax return details. I’ve skimmed over some in the past but didn’t connect the dots. Whenever I file my taxes, I like to compare my figures vs the line by line items of the average person with my similar income. There’s usually quite a big difference on donations. The average is way higher than mine. Even though I donate, I guess I don’t give much in comparison. I like to balance time and money b/c I do enjoy giving my time to good causes, not just cash. Great article, thanks!
If you’re only making $30,000 a year, the most you can ever give is probably $30,000 before taxes. For all the people bragging about FIRE, it would be nice if they gave more. At the same time, I will give more as well and not just tell other people what to do.