Living Generously: A Pathway to True Financial Freedom

Living Generously: A Pathway to True Financial Freedom

Why are we less generous when our income grows? 

A new study by the Chronicle of Philanthropy  indicates that the middle class gives a materially larger share of their discretionary income to charity than wealthier households.  As a wealth manager, it’s something I’ve noticed over the years as well.  Some of the reasons for this may include: 

  • Empathy can be harder when you’re affluent. As we earn more, we generally move into nicer neighborhoods and send our kids to better schools.  As this happens, we are more removed from those that are financially struggling in our daily life.
  • Relativism. When we move into that more expensive neighborhood, we are surrounded by people that have more than us and we feel less well off.
  • Our tax returns might show larger incomes, but we haven’t emotionally made the switch – we still feel like we aren’t that wealthy.
  • There’s much more to lose than when we had less, so we are more cautious about reducing the net worth we worked so hard to build.
  • The presence of “affluenza,” defined by the authors of the book bearing this name as “a painful, contagious, socially-transmitted condition of overload, debt, anxiety and waste resulting from the dogged pursuit of more.” 

If any of these apply, I encourage you to take a step back and consider what living more generously might do for you.  We have all experienced the positive emotional impact that comes with giving, but studies are suggesting it might even be good for your physical health  Another benefit I’ve experienced is giving to others results in more personal freedom.  My mental focus shifts as I think less about myself and more about someone that needs help – and suddenly, that new thing I can’t seem to live without has far less control over me. 

Some steps you can take to live more generously now:

  • Spend more time outside your normal circles – perhaps volunteer at a food bank, tutor a foster child, or take a volunteer family vacation to a poor area of the world.
  • The next time you catch yourself trying to keep up with the Joneses, go to this calculator to remind yourself how well you are doing.
  • Look for opportunities to be more generous in daily life –with your co-workers, family, or friends.  This could be taking over a household chore, driving a friend to the airport, visiting someone in the hospital, or just giving that hurried person at the grocery store your place in line.
  • Consider doubling your normal financial giving for one year and see how it goes. 

I don’t profess to have the answers but I can speak with authority in terms of struggling with all the issues mentioned above.  I’m planning to live this year much more generously than last year and I’ll report back on how it went.  What will you do to live life more generously?

Ben Johnson
  • Kendra VanderMeulen
    Posted at 07:32h, 02 October

    Thank you for this thoughtful post. If it is if any help to your journey, the lesson I am learning is that financial freedom is not a function of how much I have, but of how little I need. Giving breaks the cycle of need in me better than anything else I know.

    • Ben Johnson
      Posted at 14:19h, 02 October

      Thank you Kendra and for sharing the lesson you are learning. I couldn’t agree more and it is so freeing when you look at from this perspective. I think regular giving throughout the year (versus a few times per year) is also beneficial as it helps keep us focused.


  • Rosie Perera
    Posted at 16:12h, 15 October

    Another factor, even for those inclined to be generous, is that giving larger amounts of money takes more time and thought to make wise decisions, and often involves more complex transactions that also require advance planning and proper timing. As a person of wealth, you don’t want to be that single donor who gives 50% or more of a small organization’s budget, because you might overwhelm them, you might secretly wish to control their decision-making with your gift (which isn’t good for either you or them), and it’s not healthy for them to begin depending on one primary donor. Also in order to get the most bang for your buck, you do need to do some tax planning surrounding your giving, and probably give via some means other than cash/check.

    We in the higher income ranges have an enormous privilege to be able to make more of a difference with each gift we make, but it comes with the responsibility to do our research more carefully and make sure our gift isn’t going to be diminished by inefficient fundraising efforts and the like. We need to do some checking on the financial responsibility of the organizations we’re donating to.

    Furthermore, when you start giving at the level of $5 or $10 thousand dollars or more per year to certain organizations, it also comes with added time commitment because you begin to be treated as a “special” donor that the organization wants to connect with on a more personal level. It’s no longer just a good cause that you give to, but you become part of the extended family of the charity. This is exciting and makes giving more gratifying, but it is also another reason why giving takes more time for larger amounts.

    So, even though it leaves them less to live on, it is easier for a family earning $40,000 to give away 10% of their income by writing a few checks totaling $4000 to a few charities they care about than it is for a person making $400,000 to develop relationships with charities they have a passion for and figure out how wisely to distribute $40,000 worth of appreciated stock to these charities to make the most impact. And if you want to give away an even larger percentage of your income since you still don’t need that much to live on yourself, it can be quite an involving piece of your life’s work: how to balance how much to give away per year versus how long you want your investments to last for you so you can be giving away at that level long into the future.

    • Ben Johnson
      Posted at 13:30h, 16 October

      Thanks for the additional perspective Rosie and I couldn’t agree more with your comments. As gifts become larger, there are so many additional considerations and factors to weigh. And, in order to make gifts thoughtfully, careful planning is a must. This can be pretty overwhelming and I’ve seen many caring people get stuck as they start working through these issues.

      I think the first step is establishing a mindset about how generous we want to be, why it’s important, and understanding the implications. Then, it’s helpful to examine core values and identify issues that matter, ideally forming a mission statement that can serve as a guide.

      One barrier for many wealth creators is how little time they have available to think through all these issues and as a result, they aren’t as generous as they aspire to be and/or don’t feel confident about their philanthropic efforts. It’s important to keep in mind that generosity is a life’s work, and there will be times in our lives when we are wealth creating and times when we are using the wealth to change the world. To the extent we can balance our efforts and make a meaningful impact each year, all the better.