Are you rich?
Are you rich? How do you know? It depends, of course, where you live. In Malawi the per capita income is $255. Somalia $542. Haiti $824. United States $54,629. Luxembourg $116,612.
According to the Pew Research Center, 71% of the world’s population, about 5 billion people, live on less than $10 per day. What can you buy for $10? A few of the top selling items on Amazon: Super Glue, Uno, Frisbee and a jumbo muffin pan. If you lived on $10 per day would you buy a jumbo muffin pan?
Can your wealth help the 71%? I believe so.
How much to give away? A tithe, or 10%, is suggested. Malachi 3:10 sums it up pretty well: “Bring the whole tithe into the storehouse, that there may be food in my house. Test me in this,” says the Lord Almighty, “and see if I will not throw open the floodgates of heaven and pour out so much blessing that there will not be room enough to store it.”
How to give? Here are a few ideas:
Create a philanthropic plan. A giving strategy should be incorporated with your overall financial plan. It will focus your charitable efforts on causes you support.
Give monthly. Why wait until December?
Dividends and interest. A portfolio of stocks and bonds will generate an income stream for giving.
Appreciated assets. An asset with an unrealized gain is a good candidate for a donation. It will benefit the organization and you. They get the asset; you get a deduction while avoiding a capital gains tax.
Systematic withdrawal plan. Selling a fixed percentage or dollar amount each month from a mutual fund is a way to donate money to others. It will allow you to budget your giving.
Cash. Cash is earning nothing so you might as well turn it into an asset to help others.
I must warn you. Once you start giving you won’t be able to stop. The ROI on your philanthropic activity can’t be calculated on a spread sheet but give anyway.
The best definition of wealth I heard was from a fraternity brother of mine. He said, “I’m a rich man. I’m not rich monetarily but rich with friends, family and faith.”
Are you rich?
Bill Parrott is the President and CEO of Parrott Wealth Management, LLC. www.parrottwealth.com
Note: Per Capita data is from the World Bank (2014).