The Season of Giving
With Christmas cheer spreading far and wide, many are considering giving back to their favourite charities. Donating to important causes can make a huge difference in an organization’s ability to do good. However, the season of giving doesn’t just benefit those in need. Many financial advisers encourage their clients to give back because it can positively affect the giver’s personal finances as much as it warms the hearts of others.
Strengthen personal money management
Although giving money away may seem counterintuitive to growing your net worth, creating a financial plan around the season of giving can strengthen your budget. If you pick a cause you are passionate about and dedicate yourself to donating a certain amount of money to it, your budget for the whole year can be built around that goal. When you set aside money for something that matters, many advisers believe that you are more likely to stick to your budget year-round.
Motivate your earnings
Simply put, giving back feels good. For many people, donating to charity during the festive season gives them the warm and fuzzies to look forward to all year long. In fact, a recent study from the Association for Psychological Science* states that giving to others can drastically increase your happiness and wellbeing. Because the achievability of these feelings lies in your ability to offer your funds to others, the pursuit of selfless joy can be a great motivator to earn more during the year. Particularly if your income is dependent on performance or hours-worked, such as sales positions, freelancers, etc. Your desire to give back can boost your ability to give your all and increase your earnings.
Receive tax deductions
Charitable donations* are completely tax free in the UK. This means that any tax from your donation will either go to you or the charity. However, this depends on the format of the contribution, so be sure to check with a trusted financial adviser before making a move. Additionally, depending on your tax rate, you may be able to claim back a certain percentage of income tax relief for every pound donated. This means money in the bank for both you and your local charities – it’s a win-win.
Improve your mental health
Above all, one of the best consequences of the selfless act of giving is that it can have highly beneficial impacts on your mental health. Donating to charities and seeing the good it can do for your community can give people a sense of purpose that can only be found through giving to others. Especially when the days get darker and colder, it is vital to look after your mental health. That’s why the season of giving comes at such a convenient time. After all, when your mental health is on track, all the other important goods, like budgeting and financial management can come after.
The season of giving is truly the most wonderful time of the year. If you would like to integrate donations into your financial planning or would like to hear more about its benefits, consider reaching out to a trusted financial adviser.
This article is for information only and must not be considered as financial advice. We always recommend that you seek independent financial advice before making any financial decisions. Investments can go down as well as up and you may get back less than you invested.
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gpfm are an independent financial planning company dedicated to the provision of personal, professional, and objective-driven advice for our clients. We have been awarded the Chartered Financial Planners title by the Chartered Insurance Institute for offering high quality, independent and informed advice that meets the needs of our clients.