Thanks for sharing this! It’s great to have some honest and open conversations about the GWWC pledge.
FWIW I think perceived wisdom is that around 6-12 months of living expenses is pretty good as an emergency fund, which might help in terms of your runway value curve. For example, that might look like £1.8k per month (which I think is roughly the UK average) x 6-12 = £10-20k. Ideally, this would be in instant access savings, rather than stocks (but this isn’t true in my case).
Other thoughts: I think unless you expect your situation to change dramatically in the next year (e.g. you leave your job), it seems reasonable that you could both save for an emergency fund (at least partially) and donate 10%? For example, if you have a salary of £50k, that’s a takehome salary of £37k, which might be broken down like:
Living expenses = £1.8k x 12 = £22k (maybe this is slightly on the frugal side but I’m just indexing on this UK average, obviously it depends where you live)
Great comment—I’d add that usually GWWC pledges in the UK are based on pre tax so it wouldn’t actually cost the full £5k. Donations reduce your income for income tax purposes (but not NI) - Payroll Giving (UK) or GAYE—EA Forum (effectivealtruism.org)
ie.
£50k salary
£3.75k donation which is grossed up by 25% from your taxes with gift aid to £5k
If you actually donated £5k then that would be a £7.5k total donation when grossed up with gift aid.
However, the higher rate tax (40%) band starts at ~£50k a year so every £1 donated above that costs 60p
I love this breakdown, and it emphasises an important point (that was not mentioned in the post) that living expenses might actually be the highest variation, and often most critical factor in determining how much we might be capable of both giving and saving.
It was a combination of reading about Toby and the further pledge at the same time as reading some behavioural economics and learning about the hedonic treadmill that led me to switch our finances to “pay ourselves a living allowance” at a time when we were on a very low combined income and as our incomes grew so did both our savings and donations. It was because of the lower spend rate more than the savings that I felt able to take the risk of pursuing startups, big pay cuts to work in nonprofit sector, and we both took time off between jobs in 2019. It’s certainly a privilege that not everyone has (e.g. things like living in a country with reasonable basic public healthcare certainly helps), but it’s something that I’ve seen many peers not pursue (no matter how much they earn, just always spend what’s in their account) and then look upon me enviably when I’m pursuing things that give me more meaning.
Thanks for sharing this! It’s great to have some honest and open conversations about the GWWC pledge.
FWIW I think perceived wisdom is that around 6-12 months of living expenses is pretty good as an emergency fund, which might help in terms of your runway value curve. For example, that might look like £1.8k per month (which I think is roughly the UK average) x 6-12 = £10-20k. Ideally, this would be in instant access savings, rather than stocks (but this isn’t true in my case).
Other thoughts: I think unless you expect your situation to change dramatically in the next year (e.g. you leave your job), it seems reasonable that you could both save for an emergency fund (at least partially) and donate 10%? For example, if you have a salary of £50k, that’s a takehome salary of £37k, which might be broken down like:
Living expenses = £1.8k x 12 = £22k (maybe this is slightly on the frugal side but I’m just indexing on this UK average, obviously it depends where you live)
Donations = £5k
Runway = £10k
Great comment—I’d add that usually GWWC pledges in the UK are based on pre tax so it wouldn’t actually cost the full £5k. Donations reduce your income for income tax purposes (but not NI) - Payroll Giving (UK) or GAYE—EA Forum (effectivealtruism.org)
ie.
£50k salary
£3.75k donation which is grossed up by 25% from your taxes with gift aid to £5k
If you actually donated £5k then that would be a £7.5k total donation when grossed up with gift aid.
However, the higher rate tax (40%) band starts at ~£50k a year so every £1 donated above that costs 60p
(Working on a longer explainer on this which updates this piece UK Income Tax & Donations — EA Forum (effectivealtruism.org) but you can check out the underlying spreadsheet which create these graphs here: UK Income tax (including NI) - Google Sheets)
I love this breakdown, and it emphasises an important point (that was not mentioned in the post) that living expenses might actually be the highest variation, and often most critical factor in determining how much we might be capable of both giving and saving.
Oh yeah, a big one.
It was a combination of reading about Toby and the further pledge at the same time as reading some behavioural economics and learning about the hedonic treadmill that led me to switch our finances to “pay ourselves a living allowance” at a time when we were on a very low combined income and as our incomes grew so did both our savings and donations. It was because of the lower spend rate more than the savings that I felt able to take the risk of pursuing startups, big pay cuts to work in nonprofit sector, and we both took time off between jobs in 2019. It’s certainly a privilege that not everyone has (e.g. things like living in a country with reasonable basic public healthcare certainly helps), but it’s something that I’ve seen many peers not pursue (no matter how much they earn, just always spend what’s in their account) and then look upon me enviably when I’m pursuing things that give me more meaning.