From my point of view, the biggest issue that makes this question an everlasting companion for most is uncertainty. Even if I could currently give 50% away and have the same standard, how will that look like in a few years? What if I lose my job in my 50s and struggle to find anything? What if my abilities will become meaningless because of technological advancements even earlier?
I would assume for most itâs not a question of consumption vs. donations, as many essays and books make it sound. Itâs about the balance between how much to put into your own financial securement vs. donating. This is probably much easier to answer for promising 80,000 hours supported geniuses, but a very different picture for the Average Joe who struggled in school and to find employment in the first place. Itâs probably impossible to give clear answers when taking that into consideration, though.
You could try putting cash into a separate savings account earmarked for donation. When you are happy that you donât need it, donate it. (But maybe over a few years for tax efficiency)
Youâve put into clear words the struggle that I have always had. If I had a guaranteed income or some high level of confidence that I would always be able to find employment and gain income of a certain level, then Iâd find it quite easy to give away money. It wouldnât be as scarce of a resource.
There are certain parallels to the idea of put on your own oxygen mask first, as we do need to make sure we are okay before helping others. But I also suppose that the really tricky part is considering what is okay âenoughâ for us.
I strongly agree that you need to put your own needs first, and think that your level of comfort with your savings and ability to withstand foreseeable challenges is a key input. My go-to in general, is that the standard advice of keeping 3-6 months of expenses is a reasonable goalâso you can and should give, but until you have saved that much, you should at least be splitting your excess funds between savings and charity. (And the reason most people donât manage this has a lot to do with lifestyle choices and failure to manage their spendingânot just not having enough income. Normal people never have enough money to do everything theyâd like to; set your expectations clearly and work to avoid the hedonic treadmill!)
Thatâs why my own approach is âFIRE [Financial Independence, Retire Early] firstâ. In which one first plans for a frugal retirement (which, for the USA, requires way less than $1M, possibly less than half of that, so itâs highly achievable, and mainly depends on the strength of your frugal muscles, not your above-average earning power). That takes about 7 to 10 years, which can be shortened to 5 if you work hard or are lucky. That amount is than set apart in case your life takes a wrong left turn.
Then you keep working, and either donate everything (since youâre already set for life), or at least as high of a percentage youâre comfortable with.
You have to consider, e.g. the cost of raising kids, since the amount planned for a 50+ years retirement wonât have those expenses considered (in the long run, they are âtemporaryâ)
Plus the general category of âthrivingâ, since if you are optimizing for effectiveness youâre likely not optimizing for minimum absolute cost. Thatâs why Iâm not just linking Jacob Lund Fisker and telling you $7000/âyear is enough (and mind, heâs kept up at least until most recent update in 2019)
As for Average Joe⌠most limiting resource isnât money at all, but willpower and other cognitive powers. Fortunately, itâs not like the Average Joe is EA or vice versa.
In any case, consider that my answer of âhow much to put into your own financial security vs. donatingâ. Not in terms of splitting a wage, but of bypassing the question entirely.
From my point of view, the biggest issue that makes this question an everlasting companion for most is uncertainty. Even if I could currently give 50% away and have the same standard, how will that look like in a few years? What if I lose my job in my 50s and struggle to find anything? What if my abilities will become meaningless because of technological advancements even earlier?
I would assume for most itâs not a question of consumption vs. donations, as many essays and books make it sound. Itâs about the balance between how much to put into your own financial securement vs. donating. This is probably much easier to answer for promising 80,000 hours supported geniuses, but a very different picture for the Average Joe who struggled in school and to find employment in the first place. Itâs probably impossible to give clear answers when taking that into consideration, though.
You could try putting cash into a separate savings account earmarked for donation. When you are happy that you donât need it, donate it. (But maybe over a few years for tax efficiency)
Youâve put into clear words the struggle that I have always had. If I had a guaranteed income or some high level of confidence that I would always be able to find employment and gain income of a certain level, then Iâd find it quite easy to give away money. It wouldnât be as scarce of a resource.
There are certain parallels to the idea of put on your own oxygen mask first, as we do need to make sure we are okay before helping others. But I also suppose that the really tricky part is considering what is okay âenoughâ for us.
I strongly agree that you need to put your own needs first, and think that your level of comfort with your savings and ability to withstand foreseeable challenges is a key input. My go-to in general, is that the standard advice of keeping 3-6 months of expenses is a reasonable goalâso you can and should give, but until you have saved that much, you should at least be splitting your excess funds between savings and charity. (And the reason most people donât manage this has a lot to do with lifestyle choices and failure to manage their spendingânot just not having enough income. Normal people never have enough money to do everything theyâd like to; set your expectations clearly and work to avoid the hedonic treadmill!)
Thatâs why my own approach is âFIRE [Financial Independence, Retire Early] firstâ. In which one first plans for a frugal retirement (which, for the USA, requires way less than $1M, possibly less than half of that, so itâs highly achievable, and mainly depends on the strength of your frugal muscles, not your above-average earning power). That takes about 7 to 10 years, which can be shortened to 5 if you work hard or are lucky. That amount is than set apart in case your life takes a wrong left turn.
Then you keep working, and either donate everything (since youâre already set for life), or at least as high of a percentage youâre comfortable with.
You have to consider, e.g. the cost of raising kids, since the amount planned for a 50+ years retirement wonât have those expenses considered (in the long run, they are âtemporaryâ)
Plus the general category of âthrivingâ, since if you are optimizing for effectiveness youâre likely not optimizing for minimum absolute cost. Thatâs why Iâm not just linking Jacob Lund Fisker and telling you $7000/âyear is enough (and mind, heâs kept up at least until most recent update in 2019)
As for Average Joe⌠most limiting resource isnât money at all, but willpower and other cognitive powers. Fortunately, itâs not like the Average Joe is EA or vice versa.
In any case, consider that my answer of âhow much to put into your own financial security vs. donatingâ. Not in terms of splitting a wage, but of bypassing the question entirely.