I have a close friend, Charity. I like Charity. She’s one of those friends who always makes you feel good about yourself. Unfortunately, as with most friends, finding time to spend together presents challenges. We are busy with work, family, and other commitments. Sometimes, months go by without ever connecting. Like a true friend, however, when we do get together, it’s like no time has passed. We pick up right where we left off. And, Charity, in her usual form, never makes me feel I’ve neglected her. She’s always content with the time we share together.
Charity is an important part of everyone’s life, and it comes in different forms. Whether it be with cash donations or volunteering your time, budgeting for charity is necessary.
Professionals will advise that approximately 3 to 5 percent of your budget (take-home dollars) should be allocated towards charitable donations. For example, if your net income is $3,000 per month, a 3 percent donation would be $90. However, for some, that $90 might be hard to part with even in the best of circumstances.
Time is Money. If you’ve tried to set aside funds to donate, but other uses always seem to get in the way, then volunteer your time. A few hours a week at your local church or favorite charity has as much value as the dollars you’ve intended to send. An additional benefit of donating your time is that you become involved in the community and feel satisfaction about making a difference.
It’s the Standard. Many people donate knowing they’ll be able to deduct a portion of charitable contributions when itemizing their deductions for taxes. However, the 2018 tax law changes increased the standard deduction to $12,200 for individuals, $18,350 for heads of household, and $24,400 for married filing jointly, which omits itemizing for many of us. However, if your overall itemized deductions are higher than the standard amounts, you will still benefit. Although volunteering your time doesn’t qualify for a deduction, related personal expenses do! For example, mileage for the charitable use of an automobile. Always consult with a tax professional, such as a CPA, and keep good records.
Stay connected with Charity. Whether you send money, volunteer your time, or donate items you no longer need, try to keep charity as a part of your routine and overall budget. With practice, you will become accustomed to the habit of giving!
Michele Sarna is a financial advisor at Beacon Pointe and can be reached at (760) 932.0930.
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