Is Tithing One of Your Financial Imperatives?
In Newtown Park in Johns Creek there is a free lending library in what looks like a big birdhouse. Walking in the park most every day, I always check the library to see if there’s a new book that piques my interest. Recently I finished “Blue Like Jazz,” a book by Donald Miller billed as “nonreligious thoughts on Christian spirituality.” A semi-autobiographical work, it’s a collection of essays and personal reflections of a young man wrestling with his conscience midst secular surroundings as he seeks to better understand the nature of God and Jesus, and the need for an authentic personal response to that understanding.
In a chapter on the subject of money, after learning that a friend who always seemed broke and in many ways appeared to be non-religious, tithed, Don confessed to his pastor that he gave no money to the church. Rick, the pastor, asked why he didn’t give and Don replied, “Because I have no money. Everything goes to rent and groceries. So am I exempt?” Acknowledging Don’s tough financial situation, Rick said, “Nope. We want your cash.” After a brief conversation, Don speculated that maybe he made about a thousand dollars a month as a struggling writer. Rick said the church wanted a hundred dollars, ten percent, and counseled, “You should also know how much you make. Part of the benefit of giving a portion of your money is it makes you think about where your money goes. God does not want us to be sloppy with our finances, Don.”
One reason folks engage a financial planner is because they don’t want “to be sloppy with finances.” They desire a well-thought-out and disciplined approach based on defined goals and objectives and life transitions timelines. In planning what your money and investments should do for you, questions are posed. Writer Mitch Anthony, in his best-selling book, “The New Retirementality,” offered a way to think about money based on Abraham Maslow’s “hierarchy of needs.” At the base of a pyramid titled “Maslow Meets Retirement,” Anthony starts with “survival money,” funds needed to handle everyday expenses and necessities. At the next level up is “safety money,” a reserve to meet “life’s unexpected turns,” emergency money.
Next you have “freedom money,” funds for life’s fun things, hobbies, travel, dining out, theater, sports, plus personal growth and education, etc. Higher on your pyramid, is “gift money,” funds for the people and causes about which you care deeply, including support and gifts to children, grandchildren, charities, etc. Sometimes “sandwich generation” needs for offspring (whether minors or adults over age 18), or aging parents or grandparents, may necessitate funding expenses out of cash reserves or deferring “freedom money” aspirations. At the top of your pyramid is “dream money,” perhaps for a second home, motor home, boat, exotic trips. Dreams often are listed as “bucket list” items.
In talking with clients early in the planning stage, it is useful to understand religious preferences and affiliations as some folks practice tithing. For many, tithing, money donated for God’s purposes comes “off of the top,” given as part of “survival money” with faith that our Lord will provide. When Don decided to tithe he emptied his checking account that contained only eight dollars. But shortly thereafter he got a lucrative writing gig with a magazine plus well paid speaking engagements at retreats and conferences. Each time he took ten percent off of the top for his church and another ten percent went into a savings account. His life, attitude, earning power, net worth, and sense of wellbeing, improved dramatically. As an advisor I have heard the same story over and over; those who give time, talent, and treasure to causes about which they care report getting more done with more energy and success in work and play. Interesting how that works!
The concept of tithing one-tenth of your income first appeared in the Old Testament. Leviticus 27:30 instructs, “A tithe of everything from the land, whether grain from the soil or fruit from the trees, belongs to the Lord; it is holy to the Lord.” The 10% requirement specifically comes from the Hebrew translation of tithe, or “ten.”
Philanthropy is an important aspect of financial planning, which can be combined with prudent tax planning. Some Pharisees tried to trap Jesus by asking whether it was lawful to pay taxes to the oppressive Roman Emperor. Pointing out that Caesar’s face appeared on the coin of the realm, Jesus replied, “Then render to Caesar the things that are Caesar’s; and to God the things that are God’s.” (Matthew 22:21). For those blessed with significant income and net worth, it’s prudent and acceptable to minimize taxes while doing good. Various types of trust vehicles may be employed. Gifting of common stock with embedded taxable capital gains may make sense compared to giving cash. Insurance vehicles may provide tax free cash to heirs while some of the estate assets go to charity. Those taking mandatory distributions from qualified retirement plans like 401(k) or IRA plans, may donate up to $100,000 per year as a Qualified Charitable Distribution (QCD) to approved charities while having the money excluded from taxable ordinary income. That may help to lower Part B Medicare premiums.
Mark Victor Hanson, author of “Chicken Soup for the Soul,” opined, “Discover the joy of giving and you will discover the reason for living.” Life without purpose is a train wreck.
