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The Case for Giving on the Road to Financial Independence

Case for Giving

Today is “Give to the Max” day up north here in Minnesota, a perfect day to showcase a topic that is near and dear to my heart and the heart of my friend from ESI Money.

I’ve talked before about wanting to build up a sizable giving fund before retiring early, even it means this last year or two of work is more for the benefit of others than for me.

I also have donated half of my profits from this site, a number that will eclipse six figures before we know it.

Below, he’ll make a case for generosity, show you how to get started, and make some reasonable arguments against the common cop-outs. I’ll allow our guest to introduce himself:


The following post is by ESI from ESI Money, a blog about achieving financial independence through earning, saving, and investing (ESI). It’s written by an early 50’s retiree who achieved financial independence, shares what’s worked for him, and details how others can implement those successes in their lives. 


The Case for Giving on the Road to Financial Independence


In late September I sat in the audience of FinCon, the financial media conference, and watched an interview with Pete from Mr. Money Moustache.

He’s a very interesting character, quite down-to-earth and prone to saying things so full of common sense that you have to laugh because no one has said them before.

Towards the end the audience was invited to approach a microphone and ask him questions.

I was sitting a few rows back with a clear view of the microphone stand. I saw the Physician on Fire get into line to ask a question.

“Oh, this is going to be good!” I thought to myself. No matter what the question was, it was bound to be interesting to see the interaction between these two blogging titans.

It turned out to be even better than I expected.

PoF asked MMM about the latter’s donation of $100k, his plans to do it again, and so on. What ensued was a few moments of conversation about a topic we often hear very little of in the personal finance community: giving.



A Lost Topic


If politics and religion are the two topics it’s not polite to discuss in public (or at least they used to be), the subject of giving holds the same prominence in the world of money management.

Especially among the group working towards early financial independence, giving seems to rank even below the lowly topics of insurance and estate planning.

Now I haven’t done a study to confirm this opinion, but I do read hundreds of posts every week to select features for Rockstar Finance. I’ve been doing this for nearly a year, so I’ve seen thousands of posts (probably tens of thousands). Believe me, the giving posts are few and far between.

One of the exceptions is this site. Physician on Fire has emphasized giving for as long as I can remember. In fact, his post on donor advised funds was what encouraged me to finally open one myself.

Given that this audience is already used to hearing about giving, I thought it was appropriate to visit, share some observations on giving, and present a case for how we should all consider giving whether we’re on the path to FI or already there.


Three Ways to Give


There are three ways to give that get the most attention. My pastor refers to these as “time, talent, and treasure.”

In short, a person can volunteer to help an organization with any sort of task, use their special abilities (such as medical training) in service of others, or donate money to a cause.

While all of these are valid (and worth doing IMO), I’d like to focus this post on the last — giving money.

It’s my belief that even if you do the other two, you should be donating money. And, of course, giving money is the only one that has direct financial implications, so it’s the most appropriate for a financial blog.


Opposed to FIRE


One thing puts giving money in direct confrontation with the FIRE movement: math.

After all, which is easier: hitting FI saving all you can or hitting FI saving all you can less whatever you give? The answer is obvious.

To a community known for high savings rates and low spending, giving is often just another expense. It’s something to be cut. It’s not necessary. It’s a drag on the ultimate goal.

And it’s so easy to leave out of a budget. You don’t even have to give up anything to save!

BTW, let me say that it’s not just the FI community that has this issue. I’m closing in on 100 millionaire interviews and I’m surprised at how few of them give money — the percentage of givers is much lower than I would have guessed among such a wealthy group.


Two Big Reasons for Giving Now


Given these facts, I know I’m bucking trends and simple math when I suggest that we all should be givers.

But there are a couple big reasons why giving is worth it even while pursuing FI.


1. You will help others.


Let’s face it, people are hurting/hungry/dying/etc. now, so our giving needs to be now. To wait would be to leave so many behind while we simply accumulate more in our lives. How can we enrich ourselves when others are suffering? Can’t we see our way clear for at least a bit of charity while we strive toward the financial heights so few ever achieve? Does compassion for others have to die on the altar of financial freedom?

Of course this logic could be taken to an extreme and become an argument that “giving it all away” is the only logical path (ever see the end of Schindler’s List?). But like most things money-related, a balanced approach seems to be the best option — not giving it all away, but also conversely, not contributing zero either.

If you want to dismiss this argument, there’s a more self-interested reason for giving that even the most jaded person might consider…


2. You will help yourself.


How would you like a longer, happier, healthier life?

How about less trouble sleeping, less anxiety, less helplessness and hopelessness, better friendships and social networks, and a sense of control over chronic conditions?

Well, according to both the Cleveland Clinic and the Chicago Tribune this is what giving (time and money) can do for you.

Of course there’s a benefit to others, but the research shows that it really is better to give than receive.

So if for no other reason than you’re looking for a way to improve your own life dramatically, you should consider giving!



How to Start Giving


As you can see, there are some great benefits to giving for both the recipients and the givers.

Plus the negatives to giving are not as bad as portrayed. While the math does tell us it will slow down your FI journey, obviously it won’t completely stop it. You’ll still get there. And if you’re a giver, studies say you’ll be happier about it when you do. 😉

That’s why I’m asking everyone reading this to consider where giving fits in your finances, whether you are on the path to FI or not.

To help you in this effort, I want to offer some suggestions for how to incorporate giving into your FI plan. These are tips that worked for us on our path to financial independence (where we gave 26% of our gross income and still achieved FI in our 40’s).

Whether you’re giving now or not, these steps can help you start giving or give more:


1. Start small and grow over time.


I’m not asking anyone to go from zero to $20k a year overnight. That would be impossible for most and a burden that likely wouldn’t stick.

Instead, just start with a small amount — $3 a day, $100 a month, $1,500 a year. Whatever works for you.

Then increase it a bit here and there over time until it grows into something substantial. In this way it’s very similar to growing your savings — small changes over time can have a big impact.

I was giving very little when we got married. Afterwards, we started giving some (my wife is far more generous than I am) — a few percentage points of our income.

As time went on we decided we wanted to give at least 10% of our income, so we did.

From there, we increased a percentage or two each year and our rate grew steadily over time.

On top of this we added special appeals that drove the percentage even higher.

It would have been hard to go quickly from zero to 26%, but with gradual increases over time, I can honestly say that we never missed it or felt giving was a burden.


Case for Giving


2. Get involved in causes you care about.


Doing this will make you a giver faster than anything else because you’ll see the needs firsthand. You’ll witness people in tough situations and your natural tendency will be to help as much as you can.

From there, most of the financial hurdles will disappear.

Especially for the audience of this blog, think about the impact if thousands of medical professionals offered their services for free to those in great need. Couple that with monetary gifts of just a few percentage points of income.

The results would be massive.

The givers’ satisfaction would be overwhelming.

And the world would be a much better place as a result.


3. Budget for it.


On the practical side, giving is just like any other “expense” — you have to plan for it. If you do, you’ll pay it.

We always put giving into our budgets just like we included food, clothing, and housing. Since it was planned for, giving was never a surprise and we were always prepared for it.

Sometimes we even cut other expenses so we could give more, and my guess is that you’ll end up doing the same.


4. Grow your income.


A large income solves a lot of problems. Where to find “extra” money for giving is one of them.

Because we focused on growing our income, we were able to pay off our mortgage, max out our 401k, live a great lifestyle, accumulate wealth, and give — all at the same time.

This is one reason I am such a big advocate for growing your income. It opens up so many great possibilities.


5. Use tax-advantaged options to make your giving go farther.


PoF has talked about both charitable remainder trusts and donor advised funds. Both are great plans our government offers to encourage people to give.

So why not take full advantage of them? Even if you give away any savings and don’t benefit personally from them, using these vehicles just makes financial sense.



The Giving Cop-Outs


Before I close I want to address the three most common excuses I hear for not giving. They are:


1. I give taxes and these cover charitable efforts.


Don’t get me started on this one.

No, you do not give taxes. You pay taxes.

Yes, some tax money goes to helping people. But look around, do you think these funds are sufficient to cover all the suffering in the world? Not even close. This is why we as human beings need to step up and be givers.


2. I will give once I reach FI.


No, you won’t.

I have seen this time and time again as we’ve counseled people. They are all committed to giving once _________ (fill in the blank) happens.

But as soon as that issue is resolved, something else comes along. I have never seen the “I will give later” plan work. Ever.

The fact is that we all need to develop our giving muscles earlier rather than later. It’s much easier to give when you make less and have time to build it up. Going from zero to something substantial later when you’ve spent a whole lifetime not giving just won’t work.


3. I’m suspicious of charities, how they spend money, and if they even do any good.


Believe it or not, I’ve heard this from some millionaires.

Really? You can’t find one charity that you think does good work? Or one that is effective? I find that hard to believe.

But I’ll give these people the benefit of the doubt that they’re having trouble finding worthwhile causes. It just so happens that I have a solution for them: there are organizations that have done the work of finding great charities for all of us.

Check out Charity Navigator and Charity Watch if you want to find some organizations with good records. There are so many listed on each site that anyone would be hard pressed not to find an option they can support.

IMO these three are lame excuses from people who don’t want to give but would like to have an excuse to make themselves feel better. While I would like us all to give, if you don’t want to, that’s your personal decision. It’s your money and your life. Just say you’re not interested. But don’t use a weak excuse to make yourself feel better about it. No one’s buying it.


Wrapping Up


Ok, that’s enough blabbing from me. I think you get the point and are smart enough to take it on your own from here.

As we go into the holiday season, please consider giving to the charity of your choice.

Your FI journey won’t be that hampered and you’ll make life better for both yourself and others.



PoF: Thank you, ESI Money, for highlighting an important topic that is near and dear to my heart. For more from ESI on the topic of giving please navigate to:


To learn more about my preferred method of giving, the Donor Advised Fund, read on:




How do you reconcile charitable giving while pursuing financial independence? Do you give now? Planning to give later? More giving of time than money? Let us know below!



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28 thoughts on “The Case for Giving on the Road to Financial Independence”

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  5. It certainly stands out that those in the US are public about giving to charity and that’s great. The US ranks 6th in the world for charitable giving behind Australia, NZ, Ireland, Canada and Switzerland. Peer pressure is a wonderful force for good. But it is also notable how keen people are to minimise taxation with a general sense of distrust of how the government might spend this money. And yet the US healthcare system is unaffordable with poor value for money and leaves many unfortunate Americans with 3rd world healthcare. Similarly tertiary education costs are horrifying. I do wonder about the above criticism of those preferring to pay tax therefore they should not have to give to charity. I agree in the US there are many people suffering and certainly elsewhere around the world. If taxation was a little higher maybe this charitable giving could be distributed more fairly. However, interestingly research shows people get more personal happiness from charitable giving than paying tax even when they are shown where their tax dollars provide benefit. Sweden and Finland are both high taxation countries with a comprehensive cradle to grave social welfare system where everyone feels cared for by society. They rank lower than many poor African countries in charitable giving.

  6. What an interesting discussion. To me, the key to charitable giving is to really be introspective about what moves you and what YOU think might make the world a slightly better place. There is no one right answer — it could be healthcare, arts, environment, schools, foodbanks, religious orgs, animals, etc. And although I do not give to the arts, for example, I appreciate that some folks do.

    We just completed our annual stewardship campaign at our church, and so had discussions on tithing and donations. One thing that helps me with these discussions is to think that the lesson/request isn’t about giving some fixed % to the church, but rather to give to something or anything. And its OK if its not just ones church. Our church gets about 1/3 of our annual giving, with other orgs getting significant amounts too.

    I want to thank both ESI and POF for their steady commitment to the topic. I’ve been a longtime reader of ESI (starting back at his prior site) and can attest to his advocating for this for over 10 years. As for POF, I would say that this blog helped to convince me to finally open a 6 figure DAF last year.

    Lastly, if you’re interested in challenging your thinking on giving — read this:

  7. Thank you for this post! If I had a dime for every “I give time instead of money” comment to my posts on giving. Way to change the topic!

    I’ve found that giving away money helps us make smarter financial choices. Having a purpose greater than ourselves is very motivating.

    Perhaps the personal finance topic that comes up even less than giving is greed, which I think is the real reason behind many of these excuses. We should talk about this more in the PF world, because we’re all prone to greed, yet it can lead to some unhealthy outcomes. Giving is a great antidote.

    • Thanks for chiming in!

      I do like to see charitable giving highlighted, but I can see why it’s not. My giving posts generate maybe one third to one half the traffic of a typical money post. I figure people are either comfortable with what they’re doing and don’t need to hear the message or are uncomfortable with their giving and don’t want to hear it.

      Either way, I’ll continue to publish posts like these in hopes of inspiring generosity.


    • You’re totally right. Giving both time and money matters.

      Of course, it’s somewhat easier for very busy professionals to give money rather than time, or conversely for very low income people who aren’t working full time to give time rather than money. However, I’ve seen many examples of people who give a crazy level of both. It’s something that inspires me (and Rob) to strive to steward all our resources better.

  8. I’m actually very selfish.

    That’s why I give.

    Giving to others makes me feel better. It makes me feel more rich and generous than I actually am. It makes me feel grateful and blessed and gives me a boost to my “subjective well-being.”

    It also creates a channel of flowing money in both directions. That flowing sense of abundance ends up making me richer. I realize this sounds religious or new-age, but every rich person I know who gives generously has agreed with me that the more they give, the more they get. I only became a millionaire after I started my DAF in 2003. Before then my sense of scarcity limited my financial growth.

    I was in the audience when PoF asked that question of MMM. I was extremely impressed with both of them. It really helped highlight the best of the great work both do. It takes a rare and special person to ask that question knowing how many other self-serving issues could have been raised on that elevated public platform. I bet MMM doesn’t get that question often. We could use more characters like them in the FIRE community.

    • You’re too kind, WD.

      And you’re an OG when it comes to physician blogging and DAF use. You were 8 to 10 years before me with both!

      I agree with your sentiment, too. It feels great to be in a position to part with money — I wasn’t a total miser early in my career, but I’ll admit our giving was in the range of 1% to 2% of gross early on. We’re making up for lost time now.


  9. My wife and I give to charity and church because we fully realize that what we haven isn’t really ours anyway, we are merely stewards of it for a short time.

    What the spreadsheets cannot show are the true blessings we receive from being generous, obedient, and humble. I’m convinced that we have been blessed well beyond what we’ve given away because being a blessing to others has a way of coming back on us. In the end, there’s no way to go back and prove that’s true, but being a cheerful giver makes it worth it anyway.

  10. Great to hear this topic being talked about more, and I appreciate PoF and ESI for promoting it to the FI community.

    I 100% agree with the idea that “I will give as soon as (fill in the blank) happens” will never actually happen. There is always another excuse.

    I just wrote my own post on giving a few days ago and I think my thoughts actually lined up pretty well with this article.

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  12. I love this post. Giving is important for so many reasons, including those stated above. I do like to read what the millionaire interviewees and the high percentage savers say about giving. Like Steveark, we’re in the camp of giving 10% of gross income. Could we have retired already? Sure. But I don’t think that’s my purpose yet and will continue for now to work and give from our earned income. Still haven’t gone the DAF route though! ??

  13. I wish you would have covered the excuse I heard the other day on the WCI Forum: “I don’t feel any better when I give money away, in fact it makes me cranky.”

  14. This is fantastic. I have a post that I wrote when I was a wee blogger, and it’s amazing how many comments were cop-outs. ESPECIALLY the “I’ll do it later” part. Ok, my dudes, I wrote that post 3 years ago and what have you done since then?!

    It’s always interesting to me when people think that FIRE will help them manifest into something they aren’t. What’s that saying? Wherever you go, there you are? THAT.

    • I read about some grand donation plans in a Facebook group today from someone who currently gives < $100 a year. You've got to work your way up to a half a million dollar donation, and giving dozens of dollars a year is a long ways from that (unless you're a starving student -- then I get it). Cheers! -PoF

  15. My wife and I have always given over 10% of our gross income. To date that’s equivalent to a couple of million extra that could be in our portfolio today had we kept it for ourselves and invested it. But I’m convinced that learning generosity helped advance my career and more than offset the fact that our giving has always been our biggest expense. I can think of few things sadder than a millionaire who has never given to help others.

  16. Man, this is such an important topic! So glad that you guys covered it here, and it was done with a combination from two of my favorite bloggers. Win-win.

    ESI, I completely agree that people make too many excuses when it comes to giving. My wife and I give 10% of our take home each month to our church plus additional giving to other causes we believe in. While this has certainly delayed my ability to pay off my student loans, I’ve never even given it a second thought whether it was “worth it or not.” It’s simply the right thing to do for all of the reasons you list above.

    I cannot say that I’ve never thought about the fact that my student loans would have been gone 7 months sooner (would have paid off $200,000 in 15 months instead of 22), but I’ve always given because there are people that have a much greater need than me.

    Ultimately, I’ve always been a believer in the concept that if you truly want to know where someone’s heart is all you have to do is take a peek at their spending. This issue is no different.

    Thanks for highlighting an important, yet rarely talked about topic.


  17. I do my research on charities as some do have horrible records and spends much of the money on overhead etc. But today it should be easier than ever to quickly find out who’s legit an who isn’t.

    I like the “time, talent, and treasure” saying. I’m gonna use that 🙂

    • True, AF. You can easily find stats on charitable organizations online. If you don’t like how much the United Way CEO makes, give to the Salvation Army. By law, these recipients of charitable dollars have to be very transparent with where their dollars are going.



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