Bench Talk: Habit of Generosity with Kids

Bench Talk: Habit of Generosity with Kids

Video Outline:

Is your money like manure?

  • For all you Broadway Musical buffs out there, who said the following line?
    • “Money is like manure.  It should be spread around encouraging young things to grow.”
      • Dolly Levi – Hello Dolly
  • With all the things you can do with money, it basically boils down to the following:
    • Spend it
    • Save it
    • Pay off/down debt
    • Pay taxes
    • Give it away
  • In today’s Bench Talk, I’m going to spend a few moments addressing that last item – giving it away.
  • When our children were young, we would give them an allowance every two weeks.  They were each given 3 envelopes which were labeled Give, Save and Spend.  They were encouraged to give away 10%, save 10% and spend the rest.  Our goal, as parents, was to help them establish the habit, early on, of being responsible with their money.  More importantly, we wanted to teach them the value of giving a portion of their income away – wherever that was (their favorite charity, church, cause or individual).  We wanted to instill in them a spirit of generosity and that no matter how much or how little they had, they developed a habit of giving some away.
  • One idea that has gained more traction in recent years is a vehicle known as a Donor Advised Fund.  Quite simply, it allows individuals to donate cash or appreciated property (i.e. stocks) to an investment account where the donor….
    • The donor receives an immediate income tax deduction for the donation
    • The donor chooses the investment allocation for the account
    • The donor determines how much will be disbursed each year from the fund and to what charities
  • Example
    • Mr. & Mrs. Smith open a DAF with Fidelity
    • They decide to contribute $10,000 annually to the fund and instruct the custodian to actively invest the proceeds.
      • If, hypothetically, the account can grow by an average growth rate of 7% and M/M Smith determine to disburse 5% each year, this account could

(conceivably) last beyond your lifetime.

  • Those two points are, in my opinion, significant because it allows the family (children and grandchildren) to actively participate in the annual disbursement (i.e. what if each child and grandchild were allotted $1,000 annually to disburse to the charity of their choice?).  It becomes a very tangible way for the family to become involved with and excited about philanthropy.  Potentially, a great idea for parents or grandparents to involve their children or grandchildren
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