01 Oct 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?